Regional LNG: Shell says more Sakhalin LNG deals to Japan planned
Thursday, May 15 2003 - 11:57 PM WIB
Shell's Chairman, Philip Watts, said discussions with numerous potential customers were "well advanced," as he briefed reporters on Thursday's announcement that a $10 billion investment in Phase 2 of the Sakhalin II project has been given the final go-ahead by its shareholders and the Russian government.
The Sakhalin II project is an oil and LNG development jointly owned by the Anglo-Dutch oil company, Japan's Mitsui & Co. and Mitsubishi Corp. - which hold 55%, 25% and 20% stakes, respectively.
The announcement that the project will go ahead follows Monday's release that Tokyo Gas Co. had signed a contract to buy 1.1 million metric tons of LNG a year for 24 years, starting in 2007, from the Sakhalin II project.
Walter van de Vijver, who heads Shell's Exploration and Production business, said the company expects to book reserves from the project this year.
Shell's Watts said the $10 billion investment in the Sakhalin II project is the biggest-ever single foreign direct investment in Russia and is also the world's biggest integrated oil and gas development.
The project consists of two offshore production platforms; a gas condensate processing plant; two 850-kilometer pipelines; and an LNG plant comprised of two phases, or trains, of LNG production of 4.8 million tons a year.
The project involves the development of two offshore oil fields holding an estimated 1.2 billion barrels of crude oil and 500 billion cubic meters of natural gas.
A spokesman for Shell said the company expects 100,000 barrels a day of oil production in 2007, which will rise to 175,000 b/d by 2009. Production of LNG, following the start of Train 2 in 2008, is seen reaching a peak of 1.5 billion cubic feet a day.
Shell said its share of the $10 billion expected investment will equal its 55% equity interest in the project, which implies an investment of around $5.5 billion.(*)