Gazprom Management Committee addresses Sakhalin II corporate control issue


The Management Committee has addressed the Sakhalin II project corporate control issue.

The meeting emphasized that Gazprom’s representatives were present in all of the top executive bodies of Sakhalin Energy, the project operator. Gazprom’s representatives are vested with the relevant rights and authority necessary for managing the operating company and adopting decisions at all levels.

Sakhalin Energy’s Board of Directors is comprised of non-executive and executive directors, in total 17 persons.

Two out of eight non-executive directors are appointed by Gazprom and are Deputy Chairmen of the Gazprom Management Committee.

The current business activities of Sakhalin Energy are managed by the Committee of Executive Directors presently involving nine executive directors, four of which have been appointed by Gazprom (Deputy Chief Executive Officer, Commercial Director, Director for External Affairs, HR Director).

In 2009 the Committee of Executive Directors will be expanded to eleven persons, with two more representatives from Gazprom (Chief Executive Director and Technical Director).

Special emphasis was placed on introducing within Sakhalin Energy corporate management standards, regulations and requirements effective inside Gazprom Group.

The decision was taken to put the Sakhalin II progress and the corporate control item on the agenda of a Board of Directors’ meeting in November 2008.


In April 2007 Gazprom and the shareholders of Sakhalin Energy (Royal Dutch Shell plc, Mitsui & Co. Ltd and Mitsubishi Corporation), which is the Sakhalin II project operator, signed the Purchase and Sale Agreement resulting in Gazprom’s acquisition of a 50 per cent plus one share stake in Sakhalin Energy.

Sakhalin II is the world’s largest complex oil and gas project embracing the development of two fields offshore the Sakhalin Island: Piltun-Astokhskoye oil and Lunskoye gas and condensate deposits. Aggregate reserves account for over 600 bcm of gas, and over 120 mln t of oil. The project contemplates laying 300 km of offshore pipelines, constructing an onshore production facility, a trans-Sakhalin pipeline system totaling 1,600 km, Russia’s first LNG plant with the annual capacity of 9.6 mln t, as well as an oil export terminal.

As part of phase 1 of the project, since 1999 oil has been seasonally produced from the Astokhskaya area of the Piltun-Astokhskoye field. Over the past period overall oil recovery exceeded 100 mln bar. In 2007 oil supplies to South Korea, PRC, USA, Philippines, Thailand and the Island of Taiwan reached 12.4 mln bar.

Phase 2 of the project, which provides for full-scale development of the two fields, transition to year-round oil production and export and LNG production and export, is more than 95 per cent completed.

By now, practically the entire scope of welding operations is completed on onshore line pipe, and a construction program is finished for waterway (over 1,000) and seismic rupture (19) crossings.

On October 3, 2008 Sakhalin Energy and Gazprom transgaz Tomsk signed a five-year contract for rendering operation and maintenance services for Sakhalin II onshore pipeline system.

Under agreements with customers from Asia Pacific the volume of LNG so far contracted equals the projected LNG plant capacity.

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