Chiyoda Consortium wins Sakhalin II LNG Contract

Chiyoda Corporation and Toyo Engineering Corporation were jointly, with their Russian partner companies (KhinEnergo Consortium and Nipigaspererabotka), awarded an initial contract for the implementation of the grass-roots Sakhalin Liquefied Natural Gas Plant Project from Sakhalin Energy Investment Company Ltd. (SEIC) owned by Shell, Mitsui, and Mitsubishi for the development of the Sakhalin 2 project.

The planned 9.6 million tons per year of LNG plant is planned to be constructed in Prigorodnoye area in the southern part of Sakhalin Island, Russian Federation. This LNG plant consists of two trains, production capacity per train of which is 4.8 million tons per year of LNG, the largest ever in the world. The plant is planned to be operational in 2007. Shell's liquefaction process named DMR (Dual Mixed Refrigerant) process will be adopted in this project, for the first time in a base-load LNG plant, which will be best fit for the cold climate in Sakhalin. The LNG plant consists of two 100,000 cubic meter LNG tanks and an LNG loading jetty.

Chiyoda provides services on a global basis in the fields of engineering, procurement and construction for LNG projects, and its share of EPC work for world major LNG projects is approx. 30%. Toyo, on the other hand, has successfully completed numbers of large-scale projects in the world and especially the largest number of projects in Russia and former USSR amongst western engineering firms. Chiyoda's outstanding technical competence as well as successful track records of LNG projects worldwide including the recent Oman LNG project and Toyo's Russian project know-how and experience were positively evaluated and led to this contract award. Chiyoda has continuously succeeded in securing contracts for LNG projects, following the one in the Sultanate of Oman this year. For Sakhalin LNG project, Chiyoda performed Project Specification work in joint venture with Fluor Daniel.

This project, being the first LNG project in Russia, where there is world's largest reserves of natural gas, will be the major cornerstone of future gas related projects in the country, and the implementation experience of Chiyoda and Toyo in this project could be the landmark for upcoming projects in Russia in the future.