News and Media Releases

Sakhalin Energy signs an LNG supply deal with Hiroshima Gas

20/04/2006

Yuzhno-Sakhalinsk, Russian Federation, 20 April 2006: Sakhalin Energy Investment Company Ltd. signed today a full Sales and Purchase Agreement (SPA) to supply Hiroshima Gas Co. Ltd. with 0.21 million tonnes of liquefied natural gas (LNG) per annum for 20 years.

This SPA follows an earlier Heads of Agreement that was signed in May 2005, and completes the full terms and conditions of the LNG sales and purchase agreement.

Ian Craig, Chief Executive Officer of Sakhalin Energy signed the SPA with Mr. Hideki Fukayama, President Hiroshima Gas, at a ceremony in Yuzhno-Sakhalinsk, Sakhalin Island.

This deal is the first one involving use of a small LNG carrier to Sakhalin, and indicates the flexibility that can be offered at the Sakhalin Energy LNG plant marine loading facilities. Hiroshima Gas is planning to use its newly built ice class LNG vessel with a capacity of approximately 20,000 cu m to transport the LNG to its own receiving terminal in Hatsukaichi.

Sakhalin Energy’s Chief Executive Officer, Ian Craig, said: “This deal yet again demonstrates the ability of Russia in general and Sakhalin Island in particular to become an important future longterm energy supplier to Japan. We look forward to building a lasting relationship with Hiroshima Gas and justifying their confidence in the Sakhalin II Project.”

LNG will be supplied from Sakhalin Energy’s 9.6 mtpa LNG plant, which is under construction at Prigorodnoye at Aniva Bay on the southern tip of Sakhalin. This is the first LNG plant in Russia, and it will have two gas liquefaction process trains, each with a capacity of 4.8 mtpa with first shipments starting in summer 2008.

Mr. Hideki Fukayama, Hiroshima Gas President, said: “The location of Sakhalin and our ability to obtain a competitive and flexible supply deal made Sakhalin LNG a natural choice for us. We look forward to a beneficial long-term business relationship with Sakhalin Energy.”