June 16, 2008

Sakhalin Energy Raising $5.3 Bln From Jbic, Bank Consortium for Sakhalin-2

MOSCOW. June 16 (Interfax) - Sakhalin Energy, the operator of the Sakhalin-2 project, has signed an agreement with the Japan Bank of International Cooperation (JBIC) and a consortium of international banks on financing for the project's second phase, the company said in a statement.

Under the agreement, JBIC will provide $3.7 billion to Sakhalin Energy and the bank consortium will supply $1.6 billion. The funds will be used to finance the final stages of construction, testing and commissioning of Sakhalin-2 infrastructure.

The agreement sets a new Russian record in terms of the amount raised for project financing, the statement says.

"JBIC played a key role in providing project finance for our Phase 1 development. I am therefore delighted that their involvement, supplemented by participation from international commercial banks, for this strategic project is being renewed for Phase 2", Sakhalin Energy CEO Ian Craig is quoted in the statement as saying.

It was reported earlier that the bank consortium includes Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank Ltd, Sumitomo Mitsui Bank Corp and BNP Paribas.

JBIC together with the EBRD, OPIC and a bank consortium provided a loan of $348 million to Sakhalin Energy in 1997 to finance Phase 1 of the project. The loan was repaid in April 2006.

Discussion on a JBIC loan for Phase 2 began before Gazprom (RTS: GAZP) acquired a controlling stake in the project last year.

This spring Sakhalin Energy withdrew its applications for loans from the British Export Credits Guarantee Department (ECGD) and the Export-Import Bank of the U.S. (US Exim) due to the timeframe for receiving guarantees at those organizations. Sakhalin Energy and its shareholders scheduled the completion of negotiations on raising project financing for the first half of 2008.

Sakhalin-2 is a $20-billion project to develop the Piltun- Astokhskoye and Lunskoye fields with reserves totaling 150 million tonnes of oil and 500 billion cubic meters of gas. The project will produce LNG for export to Japan, South Korea and the U.S.

Gazprom holds a 50%-plus-one stake in Sakhalin Energy. The other consortium members are Shell Sakhalin Holdings B.V. with 27.5%, Mitsui Sakhalin Holdings B.V. with 12.5% and Diamond Gas Sakhalin B.V., a Mitsubishi subsidiary, with 10%.

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