The solemn actions devoted to launching of the first Russian factory for production of liquefied natural gas (LNG) within the limits of realization of the project «Sakhalin-2», have taken place today on Sakhalin island (settlement Prigorodnoe).

The President of the Russian Federation Dmitry Medvedev, the high-ranking statesmen of the countries-partners on realization of the «Sakhalin-2» project, including the Prime Minister of Japan Taro Aso, Duke of York, the Minister of Economic Affairs of the Netherlands Maria van der Hoeven, have taken part in the actions. The following heads of the companies-shareholders of «Sakhalin Energy» participated in the actions: The Head of the management committee of OAO «Gazprom» Alexey Miller, the Chief executive of Royal Dutch Shell Jeroen van der Veer, the President and the Chief executive of Mitsui Shoei Utsuda and the President and the Chief executive of Mitsubishi Corporation Yorihiko Kojima. Besides, the heads of the companies-buyers of the Sakhalin LNG and the international financial organizations took part in the actions.

«Today we started the production of LNG in Russia. It will give a powerful impulse for the development of the Russian Far East economy. Realization of the «Sakhalin-2» project will allow to strengthen positions of «Gazprom» on the world energy market, will promote the development of trade and economic relations of Russia with the countries of APR, the diversification of sources of gas deliveries in this region and by that will raise its energy security», – said the Chairman of the management committee of OAO «Gazprom» Alexey Miller.

Sakhalin has now firmly established its position on the global energy map. We thank Sakhalin Energy shareholders, The Government of the Russian Federation and the Sakhalin Oblast authorities fortheir continuoussupport and cooperation in delivering the ambitious and challenging Sakhalin II project.

When the project is fully on stream, it will supply around 5% of the world’s LNG and make a significant contribution to strengthening global energy security», - Sakhalin Energy’s Chief Executive Officer Ian Craig underlined.

Background:

The first Russian factory for producing LNG on Sakhalin consists of two technological lines with productivity of 4.8 million tons of LNG a year each. Gaining the designed capacity of the project (9.6 million tons a year) is planned for 2010.

Building of this large-scale object was conducted since August, 2003. Over  10 thousand workers and experts from more than 40 countries have been involved in the construction works.

A specially developed technology for gas liquefying with application of the double mixed coolant, raising power efficiency of production with the use of advantages of cold Sakhalin climate, is used on the LNG factory of the «Sakhalin-2».

Even before the building termination all production of the LNG factory was contracted on the basis of long-term contracts (with the validity period of 20 and more years). About 65% Sakhalin LNG will be delivered to 9 buyers in Japan which is the world's largest commodity market of LNG. Other volumes of LNGĂ are intended for consumers of South Korea and the North America.

LNG factory is constructed within the limits of the world's largest integrated oil and gas project «Sakhalin-2». The project includes the development of two oil and gas deposits on the northeast shelf of the Sakhalin Island (Piltun-Astohskoe and Lunskoe), oil extraction and production of liquefied natural gas and their export.

On April, 18th of 2007 OAO «Gazprom» and the shareholders of the company «Sakhalin Energy» (Royal Dutch Shell plc, Mitsui and Co. Ltd and Mitsubishi Corporation), witch is the operator of the project «Sakhalin-2», signed the Agreement on purchase and sale according to which «Gazprom» got 50% plus one share of «Sakhalin Energy».

On April, 16th of 2007 the Board of directors of OAO «Gazprom» recognized as reasonable opening of «Gazprom» Representation in the Sakhalin region.