12 Apr 2023 11:33

Russian govt approves sale of 27.5% share in Sakhalin Energy to Novatek for 94.8 bln rubles

MOSCOW. April 12 (Interfax) - The Russian government approved the sale of 27.5% of the Sakhalin-2 PSA project operator Sakhalin Energy LLC to Novatek for 94.8 billion rubles.

"Approve the sale price of the share in the amount of 27.49999998621683% of the charter capital of Sakhalin Energy LLC in the amount of 94.8 billion rubles and determine that the sale of this share is to Novatek Moscow Region LLC," the Russian government order No. 890 of April 11 says.

The document was posted on the official website for legal information.

Earlier, Novatek commented on its application for the share: "We proceed from the company's need for uninterrupted financial and economic activity and the maximum observance of the interests of all interested parties."

Russian President Vladimir Putin signed a decree in 2022 on the application of special economic measures in the fuel and energy complex in connection with the unfriendly actions of certain foreign states and international organizations." According the decree, Sakhalin Energy Investment Company Ltd (Bermuda), the operator of the Sakhalin-2 project, which was operating under a PSA agreement, was replaced by a Russian LLC. In August, the new operator, Sakhalin Energy, was registered and started operating.

According to the decree, upon the establishment of the Gazprom group company, Gazprom Sakhalin Holding was assigned a 50.00000001% share. The foreign co-owners of the project had to confirm their participation in the new legal entity: Japanese Mitsui & Co., Ltd. (12.5%) and Mitsubishi Corporation (10%) confirmed they would remain in the project, while Shell (SPB: RDS.A) informed the Russian authorities it would not take part as a co-owner with the new Russian operator.

The foreign partners can receive funds for their share only after determining and offsetting compensation for the damages caused by them during the project's implementation.

As part of the Sakhalin-2 project, the Piltun-Astokhskoye and Lunskoye fields of the Sakhalin sea shelf are being developed. The LNG project plant in Prigorodnoye, south of Sakhalin, began operating in February 2009, and in 2010, it reached its full design capacity of 9.6 million tonnes of LNG per year. Subsequently, a work optimization program made it possible to increase productivity by 20% to 11.5 million tonnes of LNG per year. At the end of 2022, the company produced about 11.5 million tonnes of LNG and nearly 3.7 million tonnes of Sakhalin Blend oil.