Sakhalin Energy has invited consortia involving Russian companies to bid for two contracts. "These two tenders are particularly significant because they offer a major opportunity for Russian industry to compete in the international market to win prime contracts on the Sakhalin 2 project," said Sakhalin CEO Steve McVeigh.

The tenders are for key elements of the Phase II development, which include the construction of an onshore processing facility and associated booster station as well as 1,640 km of onshore oil and gas pipelines. The bids are expected to be submitted in August with the contracts to be awarded early next year.

Sakhalin Energy said the duration of the works will be driven by target dates of year-round oil production from 2005 and commercial deliveries of LNG from late 2006. "The development of Phase II of the project will enable year-round oil production from Molikpaq, which started production on a seasonal basis (summer months) in July 1999," Sakhalin said. The contracts for the onshore processing facility and pipelines alone will be worth over $US1 billion.

Shell Sakhalin Holdings BV is a 55% shareholder of Sakhalin Energy ( a unit of Royal Dutch/Shell), Mitsui Sakhalin Holdings BV (a unit of Mitsui & Co) is a 25% shareholder and Diamond Gas Sakhalin BV (a unit of Mitsubishi Corp) holds the remaining 20% share.