Japan's Mitsui and Mitsubishi are seeking cash from state gas monopoly Gazprom in exchange for part of their stakes in the $22 billion Sakhalin-2 project, sources close to the talks said Monday. The two Japanese partners, who together hold a 45 percent stake in Sakhalin-2, are in talks with majority stakeholder Royal Dutch Shell about ceding control of the world's biggest liquefied natural gas project to Russian ownership, the sources said. "We're not all that sure we want a stake elsewhere," an industry source said about exchanging shares in the Sakhalin-2 project for assets in other projects in Russia.
The Japanese stakeholders are also demanding a guarantee that Gazprom deliver a steady supply of gas to Japanese electricity and gas companies, another source said. Mitsui president Shoei Utsuda and Mitsubishi president Yorihiko Kojima met with Shell CEO Jeroen van der Veer in Moscow and Russian officials over the weekend to discuss the project, due to come on stream in 2008 and supply 9.6 million tons per year of gas to Japan, South Korea and North America.
Resource-poor Japan has been promised over half of that supply. Talks now hinge on how to value the project, the sources said, with Shell and Gazprom expected to reach an agreement within the week. Spokesmen from Mitsui and Mitsubishi both said they could not disclose the details of the talks. Mitsui added that the talks were progressing constructively. The operating company Sakhalin Energy is 55 percent owned by Shell, with a Mitsui subsidiary holding a 25 percent stake and a Mitsubishi unit holding 20 percent.
Negotiations on the Sakhalin project turned bitter after Shell doubled its cost estimate for Sakhalin-2 last year, angering the federal government, which will have to wait longer for royalties. The project has since been under attack with threats of sanctions, withdrawal of permits and damages claims. Mitsui share prices rose 2.7 percent, to 1,730 yen ($14.64) Monday morning, while Mitsubishi prices rose 1.3 percent, to 2,275 yen, both outperforming the benchmark Nikkei average, which rose 0.25 percent.
themoscowtimes.com
The Japanese stakeholders are also demanding a guarantee that Gazprom deliver a steady supply of gas to Japanese electricity and gas companies, another source said. Mitsui president Shoei Utsuda and Mitsubishi president Yorihiko Kojima met with Shell CEO Jeroen van der Veer in Moscow and Russian officials over the weekend to discuss the project, due to come on stream in 2008 and supply 9.6 million tons per year of gas to Japan, South Korea and North America.
Resource-poor Japan has been promised over half of that supply. Talks now hinge on how to value the project, the sources said, with Shell and Gazprom expected to reach an agreement within the week. Spokesmen from Mitsui and Mitsubishi both said they could not disclose the details of the talks. Mitsui added that the talks were progressing constructively. The operating company Sakhalin Energy is 55 percent owned by Shell, with a Mitsui subsidiary holding a 25 percent stake and a Mitsubishi unit holding 20 percent.
Negotiations on the Sakhalin project turned bitter after Shell doubled its cost estimate for Sakhalin-2 last year, angering the federal government, which will have to wait longer for royalties. The project has since been under attack with threats of sanctions, withdrawal of permits and damages claims. Mitsui share prices rose 2.7 percent, to 1,730 yen ($14.64) Monday morning, while Mitsubishi prices rose 1.3 percent, to 2,275 yen, both outperforming the benchmark Nikkei average, which rose 0.25 percent.
themoscowtimes.com
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