Russian President Vladimir Putin said Thursday the Sakhalin-2 oil and gas project's environmental problems had been resolved and pledged the government's support for the project, Itar-Tass reports.
Putin was speaking at an evening meeting with the heads of Royal Ducth/Shell, Mitsubishi and Mitsui, at which Gazprom signed a U.S. $7.45 billion deal to buy a 50% plus one share stake in Sakhalin-2 from the project's shareholders.
"I'm very pleased that Russian environmental authorities and (the Sakhalin-2) investors have agreed on how to deal with (environmental) issues," Putin said. "I'd like to assure you that the Russian government will be objective (towards the Sakhalin-2 project) and will support it," he said.
“The Russian government, as well as foreign investors, is interested in the project. We have done everything to meet you halfway, and we have settled all the problems. It is very pleasing that solutions were found (for Sakhalin-2) that are satisfactory for everyone,” the president said.
“We can have many more business plans with you, we are ready for a wide and close cooperation. I am convinced that no matter what difficulties may arise, we can settle any problems provided goodwill of the parties,” he added.
Royal Dutch/Shell, the project's major shareholder, said Thursday it would sell 27.5% in the project to Gazprom while the other shareholders, Mitsui and Mitsubishi, would sell 12.5% and 10% respectively. At present, Royal Dutch/Shell holds 55% in the Sakhalin-2 project, while Mitsui holds 25% and Mitsubishi holds 20%.
Under the deal, Gazprom is supposed to pay for the stake in cash and Sakhalin Energy will remain the project's operator. The deal is to be closed in 2007.
Gazprom, Royal Dutch/Shell, Mitsui and Mitsubishi are expected to sign a production sharing agreement (PSA) for the development of the Sakhalin-2 field sometime in January-March 2007, Industry and Energy Minister Viktor Khristenko said at the meeting.
Khristenko said that following the deal, the Russian government would support the Sakhalin-2 project but it would still require the project's shareholders comply with Russian legislation.
Khristenko also said the Sakhalin-2 project's spending program would increase. Sakhalin Energy has sought to increase the project's spending plan for 2003-2010 to $22.2 billion from $12.04 billion. Earlier the Russian government opposed the move. Under the Sakhalin-2 production sharing agreement (PSA), the government is expected to compensate for Sakhalin Energy's costs by giving the company part of its share of oil until the project breaks even. The increase in the spending plan would reduce and delay the government's revenue from the project, according to Prime-TASS business news agency.
Khristenko said that the Sakhalin-2 project was expected to launch natural gas supplies in 2009.
In September, the Natural Resources Ministry cancelled the Sakhalin-2 environmental approval and threatened to stop the project. Russian environmental authorities accused Sakhalin Energy of illegal logging, violating the terms of its water use license and pipeline construction standards and waste disposal regulations.
Some observers alleged that Russian authorities' ongoing environmental probe into the project was aimed at helping Gazprom get a stake.