SakhalinⅡ Project: Sakhalin Energy signs an additional Project Finance contract
Sakhalin Energy Investment Company Ltd. (SE), where Mitsubishi Corporation hold 10% share (the shareholder structure comprised of OAO Gazprom, Royal Dutch Shell plc, Mitsui & Co., Ltd., and Mitsubishi Corporation), has concluded an additional financing agreement of US$1.4 billion for the Sakhalin-2 Phase 2 project with the consortium of international commercial banks. Nippon Export and Investment Insurance (NEXI), an Export Credit Agency owned by the Japanese government, will provide Overseas United Loan Insurance (Investment and Loan Insurance for Natural Resources and Energy) which covers the loan granted by the consortium banks. Based on the additional financing agreement and associated documents, the consortium banks will provide additional loan of US$1.4 billion.

In this context, Mitsubishi Corporation, along with other Shareholders of SE, signed a sponsor guarantee agreement which will be effective until the completion of the project.

SE has already signed other financing agreement of US$5.3 billion in June 2008, the additional project finance contract of US$1.4 billion this time makes a total debt of US$6.7 billion. The funds will be used to finance the completion of the full scope works of the Sakhalin-2 Phase 2 project, including the ongoing drilling program for gas and oil production.

As a shareholder of SE, Mitsubishi Corporation considers this conclusion of the additional project financing as one of the meaningful milestones of Sakhalin-2 Project, and will continuously support Sakhalin Energy to become a reliable energy supplier to all the customers and concerned stakeholders.

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SakhalinⅡ is one of the world’s largest integrated oil and gas development project, with estimated resource of approximately 4 billion barrels oil equivalent.

Sakhalin Energy Investment Company Ltd is the Joint Venture of Shareholders and is the Operator of the SakhalinⅡ project. Shareholder composition of the company is OAO Gazprom (50%+1share), Royal Dutch Shell plc (27.5%-1share), Mitsui & Co. Ltd (12.5%), and Mitsubishi Corporation (10%).

Project Financing is a finance scheme secured by the cash flow generated by the project, which is commonly used in the world’s oil and gas industry. Sakhalin Energy Investment Company Ltd, the Japan Bank for International Cooperation (JBIC) and a consortium of international commercial banks signed a Project Finance Contract of US$5.3 billion for the Phase2 project on 16th June 2008.

Source: Mitsubishi Corporation

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