Sakhalin II receives funding for second phase

14 July 2008

On June 16, 2008, the Japan Bank for International Cooperation (JBIC) agreed to loan up to $3.7 billion for the controversial oil and gas project in Russia.

After funding the first phase of Sakhalin II, the European Bank for Reconstruction and Development (EBRD) refused further funding in January of 2007. Civil society organizations had been largely opposed to public financing of the oil and gas project, which carries numerous environmental and social risks to the Russian Far East. However, the victory that came with EBRD’s decision to forego financing has been partially undermined by Sakhalin Energy’s recent capture of $5.3 billion in loans - $3.7 billion from the Japan Bank for International Cooperation (JBIC) and $1.6 billion from a consortium of international banks. The funds will be used to construct a marine platform, oil and gas pipelines, and a Liquefied Natural Gas (LNG) plant.  Funding from Japan is not wholly unexpected, given the involvement of Mitsui & Co., Ltd. and Mitsubishi Corporation in Sakhalin Energy, but stakeholders in nearby Hokkaido are also concerned about potential environmental effects.   

Sources

Sakhalin Energy secures funding for Phase 2 development, Sakhalin Energy, June 2008 (Sakhalin Energy website)

JBIC Signs Loan Agreement for Sakhalin II (Phase 2), JBIC, June 16, 2008 (JBIC website)

Resources

Sakhalin II (BIC website)