Sakhalin II Inks Full-Scale LNG Deal with Osaka Gas

Sakhalin Energy Investment Company signed a sale and purchase agreement (SPA) for liquefied natural gas (LNG) supply to the Japanese company Osaka Gas. The deal calls for the supply of approximately 0.2 million tonnes per annum (mtpa) of LNG for a period of more than 20 years. As the second largest gas company in Japan, Osaka Gas manages over 56,000 km of gas transmission pipelines, serving nearly 7 million gas customers in the Kansai region.

With the conclusion of this deal, Sakhalin Energy finalizes the long-term sale and purchase agreements for trains 1 and 2 volumes. Signing of the SPA follows an earlier heads of agreement (HoA) that was signed with Osaka Gas in 2007.

The Sakhalin Energy LNG plant inauguration ceremony was held on February 18, 2009. Approximately two thirds of all Sakhalin LNG will be exported to nine buyers in Japan, the world's largest LNG market. The remaining volume will go to South Korea and North America.

"The signing of this agreement and Sakhalin LNG deliveries under the deal fortify the trading and commercial relationship between Russia and Japan," Sakhalin Energy's CEO Ian Craig said at the SPA signing ceremony.

Mr. Hiroshi Ozaki, President of Osaka Gas, stated, "LNG from Russia will be delivered to Osaka Gas for the first time, and it will be our seventh LNG source on a long-term basis, contributing to our diversified LNG procurement portfolio."

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