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Gazprom: EBRD financing not critical for Sakhalin II

Dmitry Medvedev.jpg

A senior Gazprom official said Wednesday that financing from the European Bank for Reconstruction and Development was not critical for the current phase of the Sakhalin II hydrocarbon project off Russia's Pacific coast.

The EBRD delayed its decision on a second loan to the oil and gas project, when the then Shell-controlled operator came under intense pressure from regulators last year, and a controlling stake was sold to the Russian energy giant. Experts say the bank's participation could allay foreign investors' fears in the wake of the environmental scandal surrounding the project.

"I do not think we will face financing problems, as the project is 80% complete," said Medvedev, who heads Gazprom's export arm Gazexport. The gas monopoly will take on much of the financing obligations under the project, which envisions the production of 9.6 million metric tons of liquefied natural gas per year.

The EBRD, which provided a loan to Sakhalin II in 2001, and the project's shareholders will meet next week at the bank's initiative, Medvedev said.

Before the deal with Gazprom, the shareholders had asked the development bank for another $300 million. However, Gazprom officials said the sum was not vital for the project, estimated at over $20 billion.

EBRD President Jean Lemierre said Friday the bank could consider new cooperation arrangements with the project under the new core shareholder.

Gazprom purchased 50% plus one share in Sakhalin II for $7.45 billion, becoming the project's majority shareholder in December. Royal Dutch Shell and Japan's Mitsui and Mitsubishi now hold 27.5%, 12.5% and 10% in the project respectively. The deal is expected to be finalized in February.

The former operator could still face court proceedings on compensation for environmental damage estimated by Russian regulators at between $10 billion and $30 billion.

© RIA Novosti

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