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Gazprom to finish Sakhalin-2 share purchase in March

OAO Gazprom plans to complete the acquisition of shares in Royal Dutch Shell Plc's Sakhalin-2 oil and gas venture next month, giving the Russian company control over the country's first liquefied natural gas project.

„We're targeting the end of March,” Igor Bakhtin, deputy head of OAO Gazprom's eastern projects department, said in an interview in Tokyo when asked for the company's timetable for the share transaction. Gazprom agreed in December to buy 50% plus one share of the Sakhalin-2 project for $7.45 billion. Royal Dutch Shell Plc, Mitsui & Co. and Mitsubishi Corp. will each sell half of their stakes to the Russian company. Shell and the two partners have invested $12 billion in the venture, which clinched contracts to export 5 million tons a year of LNG to Japanese buyers.

Sakhalin-2 has committed to sell almost all of its planned LNG output to utilities in Japan, South Korea and North America. The venture is expected to produce 9.6 million tons a year of LNG, which is gas cooled to liquid for transport by tanker. Shell owned 55% of Sakhalin-2, Mitsubishi 20% and Mitsui 25% before the agreement with Gazprom. Russian Premier Mikhail Fradkov held talks this week in Tokyo with Japanese ministers and company executives, and reiterated that the countries should strengthen economic and trade relations.

„Energy still is the pillar of the cooperation area that Japan and Russia should pursue,” Fradkov said in his opening speech at a breakfast meeting with Fujio Mitarai, the chairman of Keidanren, the lobby group that represents Japan's biggest companies. „Apart from energy, the two nations should also be able to expand cooperation in the areas of transportation, information-technology, and the projects that help build Russia'sinfrastructure.” (Bloomberg)