Gazprom to Take Majority Stake in Sakhalin Energy

Gazprom's board has approved deals for the company to join Sakhalin Energy Investment Co. Ltd. as the leading shareholder.

On December 21, 2006, Gazprom, Royal Dutch Shell plc, Mitsui & Co., Ltd. (Mitsui) and Mitsubishi Corporation signed the Protocol on Gazprom's joining Sakhalin Energy Investment Company Ltd. (Sakhalin-2 project operator) as the main shareholder.

In pursuance with the terms set in the Protocol, Gazprom will purchase 50 percent plus one share in Sakhalin Energy for US$7.45 billion. Each of the existing Sakhalin Energy shareholders will decrease its stake by 50 percent at the proportional payment distribution aimed at making the deal.

The Coordinating Committee was set up in pursuance of the January 30, 2007, Order of the Gazprom Management Committee Chairman Alexey Miller to implement the Gazprom Sakhalin Island Offshore Development Strategy endorsed by the Board of Directors in 2006. Along with other responsibilities, the Coordinating Committee will coordinate Gazprom's joining Sakhalin Energy Investment Company Ltd. as its main shareholder.

Being the most explored area in the Far Eastern Seas, the Sakhalin Island offshore has seen the discovery of nine hydrocarbon fields with the aggregate gas, oil and condensate reserves making up 1.2 tcm, 394.4 million t and 88.5 million t, respectively. The prospective hydrocarbon resources in Sakhalin's offshore exceed 6 btce.