Gazprom's Sakhalin-2 buyin to offset environmental damage

Eric Watkins
Senior Correspondent

LOS ANGELES, Dec. 28 -- OAO Gazprom Deputy Chief Executive Alexander Medvedev said Dec. 28 that a portion of the $7.45 billion his firm spent to acquire a controlling stake in the Sakhalin-2 oil and gas project would go toward correcting alleged environmental damage caused by the development (OGJ Online, Dec. 21, 2006).

"All environmental issues will be agreed within the framework of a commission that will be set up by the Ministry of Natural Resources and Sakhalin Energy shareholders, including Gazprom," Medvedev said.

"We naturally valued potential expenditure for environmental compensation when the cost of our entry (into Sakhalin Energy) was being agreed," he said.

Medveev said a preliminary March 2007 deadline had been set for Gazprom to pay the $7.45 billion for its stake in Sakhalin Energy, the project's operator, a joint venture of Royal Dutch Shell PLC, Mitsui & Co., and Mitsubishi Corp.

He said the agreement will be completed no later than February 2007 and that payment for Gazprom's participation in the venture is due no later than the end of first quarter 2007.

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