Sakhalin-2 operator renegotiated almost all long-term contracts

YUZHNO-SAKHALINSK, 28 Sep — PRIME. Sakhalin Energy (the operator of the Sakhalin-2 project) has renegotiated almost all LNG supply contracts with long-term buyers after re-registration to Russian jurisdiction, but there are problems with spot supplies, Andrey Okhotkin, the company’s commercial director, said.

“The move was without loss. We are almost finishing all the processes. Almost all of the contracts with our long-term buyers have already been renegotiated. Yes, we are experiencing problems with the sale of spot lots, since not everyone today, for political reasons, participates in our sales processes, but the main backbone has remained, and we will expand it,” he said during the Sakhalin Oil and Gas forum.

According to him, India, as well as Pakistan, Bangladesh, Vietnam, Myanmar, and Thailand will increase purchases of LNG, including Russian ones. He noted that all problems related to the insurance coverage of operations have been resolved with the oil fleet, but questions remain with the LNG fleet.

“Despite all these turbulent situations, we were able to retain our foreign customers. We continue to sell everything that we produce, and we produce a lot, as you know. Close to 11.5 million tons of LNG per year,” Okhotkin added.

He also said that Sakhalin Energy offered the Ministry of Energy to help the Sakhalin-1 project, which had suspended oil and gas production, with the sale of unsold volumes.

“Gas cannot be supplied, because the oil tanks are full, therefore, production cannot continue. We suggested: let’s, maybe we will deal with it, we would be happy to connect and focus the unsold volumes,” the director of the operator said.

According to him, Sakhalin Energy is ready to provide the regions with gas consistently throughout the winter. Sakhalin Energy is ready to come to the aid of its neighbors and the region and ensure the supply of gas, first of all, for the entire winter period without interruptions, because together with Sakhalin-3, if you calculate the volumes, especially November, December, it may simply not be enough ” , he explained.

On June 30, Russian President Vladimir Putin signed a decree ordering the replacement of the operator of the Sakhalin-2 project with a new, Russian, legal entity. In the former operator, Sakhalin Energy, Gazprom owned 50% plus one share, Shell 27.5% minus one share, Mitsui 12.5%, Mitsubishi 10%.

The new operator (OOO Sakhalin Energy) was established on August 5 with a 50% stake in Gazprom Sakhalin Holding. The Government of the Russian Federation allowed the Japanese companies Mitsui & Co and Mitsubishi Corporation to transfer their shares in the project. Shell announced in September that it would not participate in the new operator.