Sakhalin 2 deal sealed: Gazprom has officially joined the Sakhalin 2 development, according to Russian media
Gazprom 'takes Sakhalin 2 slice'
Russian gas monopoly Gazprom has closed the deal which sees it take a 51% stake in the Sakhalin 2 development, according to Russian media.
Gazprom paid $7.45 billion to the other Sakhalin 2 shareholders, UK supermajor Shell and Japan’s Mitsui and Mitsubishi for the stake. The deal was to have closed by the end of December last year.
According to Russian pro-government 24 hour news channel Vesti, the closed last night.
Under the terms of the deal, Shell will retain a blocking minority stake in Sakhalin 2 and also will continue to operate the development, in Russia's Far East, through operator Sakhalin Energy.
However, when contacted by UpstreamOnline this morning, a Sakhalin Energy spokesman in Moscow denied the deal was completed yesterday.
Vesti's report added that plans to boost the development's second phase budget to $19.4 billion from an original $10 billion have also been approved.
During the second phase, Sakhalin Energy will instal two new offshore oil and gas production platforms, offshore and onshore pipelines, one of world’s largest liquefied natural gas plants and LNG and oil export terminals on the Sakhalin Island.
The company expects first LNG gas deliveries to begin in autumn 2008.
Meanwhile, industry sources told Reuters that "red tape" is all that is preventing Gazprom and Shell from completing the deal.
"There are no outstanding issues between the parties but the deal has to follow certain procedural steps for completion," said one industry source close to the deal.
One source said the final agreement had been sent to the office of Prime Minister Mikhail Fradkov before getting bogged down in procedural questions.