Sakhalin-2 project operator Sakhalin Energy has reached agreement for additional deliveries of liquefied natural gas (LNG) to Kogas of Korea, a Russian Energy Ministry statement says.

The additional gas will be provided before March of this year. How much has not been specified. The contract has been approved by the ministry's supervisory council.

The LNG plant built in the Sakhalin-2 project has capacity of 9.6 million tonnes. Sakhalin Energy has said that all of it has been contracted for. The first contract was secured in 2004. The initial idea was that the first shipments of LNG would begin at end-2007, but Sakhalin Energy shifted the plant's launch date to the summer of the following year. The company said at the time that it had negotiated with potential customers regarding the move.

Later, the company pushed the launch date back again, to end-2008 and yet again to early 2009. The first tanker was loaded with Sakhalin-2 LNG in March 2009.

In March of 2010, Sakhalin Energy submitted for the supervisory council's consideration its expenses for settling the under-shipment of LNG that occurred in 2007-2009 due to the delays in commissioning the plant. According to the Energy Ministry, Sakhalin Energy requested the inclusion of $1 billion in costs for unsupplied gas. But the council, one source said, rejected that request.

Sakhalin Energy almost immediately after launching the plant began increasing LNG production capacity, and ended 2010 having produced 10 million tonnes. Sakhalin Region administration figures show that production had reached 10.6 million tonnes of LNG.

An Interfax source close to the Energy Ministry said Sakhalin Energy had virtually completed the export of the LNG shortfall by the end of last year, beginning of this. Last October, the company secured a middle-term agreement to supply additional LNG to Tokyo Electric.

Sakhalin Energy is owned by Russia's Gazprom (RTS: GAZP) (50%) Royal Dutch Shell (27.5%), Mitsui (12.5%) and Mitsubishi Corp (10%).

Kogas is one of the project's main customers for LNG.

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