Sakhalin Energy Signs Awards for Three LNG Ships

Sakhalin Island
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In another milestone for the Sakhalin II Project, Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) has awarded contracts to two Japanese-Russian Ship owning consortiums for the long-term time charter of three new-built LNG ships at a ceremony in London today.

A contract for two ships went to a consortium consisting of Nippon Yusen Kabushiki Kaisha (NYK) and JSC Sovcomflot, whilst a second Japanese-Russian consortium consisting of Mitsui O.S.K. lines, Ltd (MOL), Kawasaki Kisen Kaisha, Ltd (K Line) and Primorsk Shipping Corporation, was awarded a contract for one LNG ship.

The NYK Line/Sovcomflot consortium will have their two 147,200 m3 LNG ships constructed at Mitsubishi Heavy Industries with delivery scheduled for quarter 4 in 2007. The MOL/K Line/Primorsk Consortium will have their similar sized ship constructed by Mitsui Engineering & Shipbuilding for delivery by quarter 2 in 2008.

Under the conditions of the contracts, the three ships will have ice strengthening and will be designed to operate at low temperatures to allow them to make deliveries from Sakhalin Energy's LNG Plant at Prigorodnoye in Sakhalin's south all year round.

CEO Ian Craig, who signed the contracts on behalf of Sakhalin Energy, said: "We are extremely pleased to have awarded contracts for three new LNG ships to two Japanese-Russian consortiums who bring a unique combination of over 20 years accident free experience in LNG shipping, together with complementary skills in the safe navigation of Russian ice bound conditions. We look forward to working with NYK/Sovcomflot and Mitsui OSK Line/K Line /Primorsk to provide the LNG ships that will carry gas to Sakhalin Energy's customers from 2007."

Commercial Director Andy Calitz said: "These two awards are another example of the large scale involvement of Russian companies by Sakhalin Energy in the Sakhalin II Project. This is the first time that Russia has been involved in LNG shipping. This was a highly competitive international tender, and we believe this is a major success story for the Russian shipping companies involved. They will play a very important role in partnering the experienced Japanese shipping companies in the construction, ownership and world-class operation of these LNG ships, and will assist with manning the ships with highly trained Russian crews".

Governor of Sakhalin Region, Ivan Malakhov, said: "These LNG ship awards signify further major steps forward for Sakhalin and Russia. It takes the marketing and export of Sakhalin II LNG to new heights of achievement - not only are we making excellent progress on the development of Russian LNG, but now we will also have the capacity to ship it as well. Secondly, it marks a significant new development in Russia's long and proud maritime history with the entry of our nation into the LNG shipping industry. Sakhalin and the Sakhalin II Project have yet another unique achievement to add to the list of firsts this landmark Russian oil and gas development has already achieved."

Sakhalin Energy is further delighted to be able to work with Mitsubishi Heavy Industries and Mitsui Engineering and Shipbuilding. These two shipbuilders have long established international reputations for constructing high quality Moss type LNG ships.

The two winning consortiums were selected from a field of 12 international shipowners and shipyards.

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