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    SAKHALIN ENERGY, TOHO GAS SIGN LUCRATIVE CONTRACT

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    YUZHNO-SAKHALINSK, MARCH 19, 2004, (RIA-NOVOSTI) - The Sakhalin Energy company and Japan's big-league Toho Gas corporation have signed a contract stipulating liquefied-gas sales; this contract is valid for 23 consecutive years.

    The Japanese corporation will be annually buying 0.3 million tons of this environmentally-friendly fuel being produced on Sakhalin island, reads the press release of the company's public relations division.

    Gas deliveries are to begin somewhere in 2007, that is, when the world's largest liquefied-gas factory will be commissioned. This enterprise is now being built in Prigorodnoye town, which is located in south Sakhalin's ice-free Aniwa bay. The entire factory will comprise two automatic transfer lines, producing 9.6 million tons of liquefied gas each year.

    The Toho Gas contract is seen as Sakhalin Energy's fourth long-term contract with Japanese energy corporations. The company's marketing strategy enabled the first stage of the incomplete liquefied-gas factory to attain design capacity; this fuel will eventually be sold to Japan.

    The Sakhalin Energy Investment Company Ltd. operates the Sakhalin-2 project aiming to develop this deposit in line with a product-sharing agreement. For its own part, the Shell concern owns most corporate shares. This company was established in 1994 for the purpose of developing the Piltun-Astokhsky and Lunsky oil-and-gas deposits on the Sakhalin shelf in the Sea of Okhotsk(Russian Far East).

    The Sakhalin-2 project is the largest project with direct foreign investment ever to be implemented on Russian territory. This project requires approximately $10 billion to complete. Successful oil production, which got underway at the Vityaz (Knight) facility in July 1999, still continues. 10.77 million barrels of oil were exported over the entire 2002 period within this project's framework. The decision to implement the project's second stage highlights its impressive scale; as a matter of fact, this is the most ambitious comprehensive oil-and-gas project in history. Plans are in place to build the first-ever Russian liquefied-gas factory in line with the project's second stage; this enterprise is to turn out 9.6 million tons of liquefied gas each year.

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