Updated June 3, 2008

Japan Bank for International Cooperation (JBIC) and four banks are finishing to work on loan at 550 billion yen ($5,3 billion) for Sakhalin- 2 project.

As reported the Japanese newspaper Nikkei, it is assumed that JBIC would allocate around $3,7 billion to the project, and the rest $1,6 billion would be provided by Bank of Tokio-Mitsubishi UFJ, Mizuho Corporate Bank Ltd., Sumitomo Mitsui Bank Corp, BNP Paribas. According to the Japanese newspaper data, an agreement about a loan could be signed with Gazprom (owns the controlling interest in the project) in mid-June.

Piltun Astokhskoye and Lunskoye fields with total extracted reserves of 150 million tons of oil and 500 bcm of gas are developed within Sakhalin-2 project framework (its total cost is estimated at around $20 billion). Liquefied natural gas from Sakhalin will be supplied to Japan's energy companies.

In 1997 JBIC has already allocated a loan to Sakhalin-2 operator – Sakhalin Energy – in order to finance the first stage of the project. An issue about JBIC loan for the second Sakhalin-2 stage has been discussed before the changes within the project ownership structure have been made, where Gazprom has received a controlling interest last year. Now Sakhalin Energy stockholders list Gazprom (50% + 1 stock), English and Dutch Royal Dutch / Shell (27,5%), Japan's Mitsui (12,5%) and Mitsubishi (10%).

Expert comments

Alexander Shtock, Department Director of ICG 2K Audit – Business Consulting

Japanese banks are ready to allocate the core loan to Sakhalin-2 project development.

However, loans will be given under special conditions.

First, Japanese companies affiliated with two lenders – Mitsubishi and Mitsui – have stakes in the project. Second, Japan is interested in gas supplies from Sakhalin. And it is obvious that Japan's state bank is ready to give the core loan.

Lately Gazprom pays attention to projects located in Asia Pacific Region more and more. Gazprom entrance to the European market

has become problematic as any attempts to root in Europe are opposed by

the EU authorities.

Gazprom considers North American markets prospective ones.

However, this region location presupposes additional charges for projects in the region.

Regard ing this, APR markets would obviously become a priority for Gazprom

in the nearest future.

However, at the current moment, even taking into account the launch of new deposits in eastern Siberia and the Far East in the nearest future, the Russian company is not ready to supply the demand of APR countries. China, South Korea, Japan are among the world largest gas importers, and Gazprom is ready to cooperate with all these countries.

In particular, gas pipeline construction to China is planned, and talks between Gazprom and the Korean Kogaz have resumed.

Japan has also been holding talks with the Russian company about supplies long since.

Demand for the gas in APR permits Gazprom to choose from the most attractive projects.

In particular, Japan has already offered Gazprom the stake of its own market.

At 2006 end the Japanese JPDO has been holding talks with Gazprom about gas pipeline construction from Sakhalin to the Japanese Hokkaido Island. JPDO comp any has offered Gazprom to sell gas at the internal Jap anese market together as an additional bonus. Now Japanese banks are ready to allocate a large loan to develop Sakhalin-2 expecting obviously to get additional guarantees of supplies.