Gazprom seeks Japan Bank funding for Sakhalin-2
Eric Watkins
Senior Correspondent
LOS ANGELES, Sept. 7 -- Russia's OAO Gazprom, said to be faced with financial constraints over the Sakhalin-2 LNG energy project, has resumed negotiations with the Japan Bank for International Cooperation (JBIC) to secure needed funding.
The European Bank for Reconstruction and Development, which had been central to Sakhalin-2's initially planned lending syndicate, withdrew in August due to concerns over Gazprom's efforts, perceived as illegitimate, to gain control of the development.
In April Gazprom acquired a 50%-plus-one share in the Sakhalin Energy Investment Co. for $7.45 billion under an agreement with SEIC shareholders (OGJ Online, Apr. 24, 2007).
SEIC stakeholders—Royal Dutch Shell PLC, Mitsui & Co., and Mitsubishi Corp. —were forced to sell their majority stake to Gazprom following Russia's halting construction on the project for alleged environmental infractions.
Absent EBRD, Gazprom is seeking new backers to meet the project's 2-trillion-yen cost. Gazprom Deputy Chairman Alexander Medvedev said his firm and the three minority partners have reached a memorandum of understanding for JBIC financing.
Medvedev also said JBIC would consider financing other oil and gas development projects in such areas as East Siberia, a region of key concern to Japan.
Russia has long insisted that development of hydrocarbon resources in East Siberia would be essential to the development of the East Siberia Pacific Ocean oil pipeline that Japan has long sought.
In February, Russian Minister of Industry and Energy Viktor Khristenko made clear that his country would like Japanese investment in the development of East Siberian crude and gas reserves as part of the ESPO pipeline project (OGJ Online, Feb. 26, 2007).
Contact Eric Watkins at [email protected].