Transfer of Shares

19 Apr 2007 08:46

Mitsubishi Corporation19 April 2007 Translation of report filed with the Tokyo Stock Exchange on April 19, 2007 Transfer of Sakhalin Energy Shares Completed On April 18th in Moscow City, Russian Federation, Mitsubishi Corporationcompleted the share transfer contract, transferring part of its stake inSakhalin Energy Investment Company (Sakhalin Energy), owned jointly with RoyalDutch Shell plc (Shell) and Mitsui & Co. Ltd (Mitsui), to OAO Gazprom (Gazprom). In accordance with the Contract, Structure of Sakhalin Energy's shareholder willbe Gazprom 50% plus 1 share, Shell 27.5% minus 1 share, Mitsui 12.5% andMitsubishi 10%. As a result of this share transfer, equity method accountingwill no longer be applicable for Sakhalin Energy. This transaction implements aprotocol signed on December 21st 2006. Transaction amount is US$7.45 Billion asa whole, 1.49 Billion for our portion, while impact on our financial results isnot expected to be material. Under new shareholding structure, four shareholders including Gazprom, willjointly work towards completion of Sakhalin II Project works, so as toaccomplish timely supply of LNG to contracted customers in Japan, Korea andNorth American West Coast. In addition, four shareholders including Gazpromagreed on Area of Mutual Interest (AMI) arrangement, which enhances theprospects for expansion of Sakhalin II project through joint efforts. In addition, the Ministry of Natural Resources of the Russian Federation hadannounced its approval of the revised Environmental Action Plan (EAP) on 16April. Sakhalin Energy prepared that plan with input from all shareholders. Italso provides targets and action points for conservation of biodiversity ofSakhalin Island, including fish stocks and rare flora and fauna species. Mitsubishi welcomes the equity participation of Gazprom in Sakhalin Energy, andbelieves that these series of agreements have now established the platform forthe timely start-up of LNG delivery. Project Information Sakhalin is a new world-class oil and gas province, with estimated resources ofsome 45 billion barrels oil equivalent (boe). Sakhalin II is the largestintegrated oil and gas export project in the world, with total resources of some4 billion boe. Sakhalin II today has production capacity of 80,000 boe per day during theproduction season. The subsequent phase of the development will take the totalproject capacity to 170,000 barrels/day of crude oil (and condensate) and 9.6million tonnes per year of LNG production. The second phase of the project is approximately 80% complete. More than 17,000workers are currently employed in the construction of the project, of whicharound 70% are Russian nationals. The planned LNG production has been sold undercontract to customers across the Asia-Pacific region. The Sakhalin II project is governed under a PSA, whereby the project partnersfinance the construction costs of the project, take on the development risk, andrecover these costs from sales of oil and gas. So far, some $600 million ofroyalty, bonuses and taxes have been paid to the Russian government by the endof 2006. Sakhalin II includes the following elements: • Offshore production facilities including the Molikpaq platform (Piltun Astokh-A), the new Piltun Astockh-B and Lunskoye-A platforms and some 300 km of offshore pipelines; • An onshore processing facility to take the gas and crude oil from both fields; • Onshore oil and gas pipelines to the south of the island; • An oil export facility capable of year-round operation; • The first LNG plant and associated export facilities built in Russia; • Island infrastructure upgrades, such as roads, bridges, rail, port, airport, and medical facility upgrades. End This information is provided by RNS The company news service from the London Stock Exchange