Bloomberg News

Gazprom Expansion of Sakhalin-2 LNG Plant May Cost $7 Billion

January 31, 2012

Jan. 30 (Bloomberg) -- OAO Gazprom and its partners in the Sakhalin-2 project may decide on expanding their liquefied natural gas plant this year, to add supplies by 2018, said Andrey Galaev, the venture’s chief executive officer.

An expansion may cost $5 billion to $7 billion based on preliminary estimates, Galaev told reporters today in Moscow. Depending on changes in oil and gas prices, the construction cost may drop as low as $3 billion or climb as high as $8 billion, he said.

A decision should be made this year to reach a window for supplies in 2016 to 2018, before global LNG production capacity rises, according to Galaev.

Royal Dutch Shell Plc holds 27.5 percent of the project after agreeing to cede control of Russia’s first LNG plant to Gazprom in 2006. Mitsui & Co. has 12.5 percent and Mitsubishi Corp. owns 10 percent.

--Editors: Torrey Clark, Stephen Cunningham

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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