MOSCOW (AFP, AP) - Russian gas giant Gazprom on Wednesday took control of the huge Sakhalin-2 liquefied gas project from Royal Dutch Shell and two Japanese groups for $7.45 billion, the four companies announced. An agreement on the acquisition was signed by the parties in Moscow on December 21, 2006.
"Under its terms Gazprom acquires a 50 percent plus one share stake in Sakhalin Energy (the project operator) for $7.45 billion in cash," the companies said in a joint statement.
"The other three shareholders, Shell, Mitsui and Mitsubishi each dilute their stakes by 50 percent to receive a proportional share of the purchase price."
The project is located in Russia's Far East and, with total investment of nearly $22 billion, is considered the largest ever private investment venture. Starting in the summer of 2008, Sakhalin-2 will enable the shipment of LNG by sea from Sakhalin Island, notably to the Japanese market.
"Gazprom's entry into Sakhalin-2 is a powerful impetus for implementation of this large-scale development in the area of energy export to Asia Pacific and North America," Gazprom's Deputy CEO Alexander Medvedev said in a statement. "It will facilitate the company's strategy of phased entry into the global liquefied natural gas market."
After launching LNG production next year, Gazprom will appoint a new head of Sakhalin Energy, Medvedev told reporters.
"We will have a balanced system of management where positions will be divided between representatives of Gazprom and other shareholders and the position of general director will be nominated by Gazprom," Medvedev said.
The December agreement came after months of pressure by Russian authorities who had accused Shell, Mitsui and Mitsubishi of having violated environmental regulations.
Meanwhile, Russia's Industry and Energy Ministry announced Wednesday that Sakhalin Energy would nearly double the budget for the second phase of development to $19.4 billion.