The other shareholders in Sakhalin Energy are Mitsui Sakhalin Holdings BV (parent company: Mitsui and Co Ltd) 25 percent and Diamond Gas Sakhalin BV (parent company: Mitsubishi Corporation) 20 percent.
The joint venture formally declared its positive investment decision following unanimous approval of its development proposal by its shareholders and the project's Supervisory Board, consisting of representatives of the company and the Russian Federation.
The Sakhalin II development represents the largest single foreign direct investment project in Russia, requiring an investment of approximately $10 billion. Phase 1 of the project has been successfully producing oil from the Vityaz Complex since July 1999, exporting over 10 million barrels of oil in 2002. Today's decision to commit to Phase 2 underpins what is thought to be the biggest single integrated oil and gas project ever undertaken. It also includes the construction of a liquefied natural gas (LNG) plant with a capacity of 9.6 million tons per annum (mtpa). This plant will use Shell's proven Liquefied Natural Gas (LNG) technology and reinforce Shell's position as the world's leader in the LNG business.
Sakhalin II Phase 2 involves the further development of the Piltun-Astokhskoye field - an oil reservoir with associated gas - and the development of the Lunskoye field - a gas reservoir with associated condensate.
Key features of the project include:
Phase 2 of the project is expected to generate value of more than $45 billion for the Russian state. Sakhalin Energy expects 70% of the project to be "Russian Content" - Russian businesses, materials and contracts - over the project's life. It is estimated that the project will generate110,000 man-years of employment for Russian nationals during the project life.
All figures quoted are 100% project basis.
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