Shell ready to build liquefied gas factory on Sakhalin island

The British-Dutch Shell concern can build a third liquefied-gas factory on Sakhalin island, while implementing the Sakhalin-2 project, the concern's spokesperson noted the other day.
Shell is building two liquefied-gas enterprises with an annual capacity of 9.6 mm tons there. Both factories are to be commissioned in late 2007. Contracts for the annual delivery of 3.8 mm tons of gas have already been signed, what with Japan acting as the main client.
“First of all, we intend to sell all gas, due to be produced by late 2007,” the corporate spokesperson added. However, shareholders might eventually decide to build a third liquefied-gas factory, if everything works out fine. Japan alone will be able to buy 6 mm tpy of liquefied gas.

The Sakhalin-2 project is the first-ever product-sharing agreement to be implemented on Russian territory. This project comprises the Piltun-Astokhsky and Lunsky oil-and-gas deposits, which are located in the Okhotsk Sea about 15 km from the shore; the Okhotsk Sea freezes 6-7 months each year.
The Sakhalin Energy Investment Company (Sakhalin Energy) operates this project. Sakhalin Energy was established in 1994 for the purpose of developing Sakhalin-shelf oil-and-gas deposits within the framework of the Sakhalin-2 product-sharing agreement.

The British-Dutch Shell Sakhalin Holdings owns 55 % of this company's shares, with Japan's Mitsui Sakhalin Holdings owning another 25 %. And the rest, i.e. 20 %, belongs to Diamond Gas Sakhalin, which is a Mitsubishi subsidiary. The stage-by-stage Sakhalin-2 project will take some 30-40 years to implement, receiving investment to the tune of $ 10 bn.
According to experts, both Sakhalin-2 deposits contain more than 150 mm tons of crude oil, as well as 500 bn cm of natural gas. The project's first stage got underway in 1996, with the concerned parties developing the Piltun-Astokhsky deposit's Astokhsky sector and obtaining initial oil in July 1999.

The ice-resistant Molikpaq oil rig was placed on the north-eastern Sakhalin shelf during the initial stage; moreover, the single-anchor Okha pier and floating oil reservoir, which is, in fact a super-tanker (159,000 tons deadweight), was constructed. These three facilities will comprise the Vityaz (Knight) joint production complex with the onset of each oil-production season (late May-early June), thus producing oil and pumping it to tankers.
This interim plan will be implemented several years from now, that is, after an oil pipeline snakes into southern Sakhalin, and after a coastal oil terminal is commissioned in the town of Prigorodnoye (Suburban), the island's Korsakov district.