NYK Establishes First Joint Venture With a Russian National Shipping Company - Decided to Build 4 New LNG Carriers, of Which 2 Are Targeted for "Sakhalin II Project"
November 15, 2004
Nippon Yusen Kaisha (NYK) has concluded a long-term charter agreement with Sakhalin Energy Investment Company Ltd. for use of two newly built LNG carriers in "Sakhalin II Project." Simultaneous with this agreement, the Company has concluded a contract to establish a joint venture with JSC Sovcomflot, a Russian national shipping company, for building four new carriers.
Two of the newly built carriers are targeted for the Sakhalin II Project and the other two will be used for another LNG Project scheduled to operate in the future. This is the first time the Company has concluded a contract with a Russian national shipping company.
In the Sakhalin II Project, the quantity of recoverable reserves of natural gas is estimated to be about 360 million tons when converted into LNG. The quantity of LNG production is estimated to be 4.8 million tons per year in the first year and is expected to reach 9.6 million tons per year after 2008 when it is in full operation. The company anticipates an increase in the need for charter carriers due to the development from this project.
We see this partnership with Sovcomflot as an ideal way to actively enter the natural gas business which is expected to greatly expand as Russia has more than one-third of the world's recoverable reserves of natural gas.
| Chartering Party: | Sakhalin Energy Investment Company Ltd. The stockholders are Shell (55%), Mitsui & Co., Ltd. (25%), and Mitsubishi Corporation (20%). |
| Carrier Owner: | A joint venture company by JSC Sovcomflot and NYK.(JSC with 40% of the stock, NYK with 60% of the stock) |
| Term of Charter: | 20 years after final completion of the carriers |
| Carriers To Be Chartered: | 2 Moss type LNG carriers with capacity of 147,000m3 |
| Shipbuilder: | Mitsubishi Heavy Industries, Ltd. |
| Completion Date: | Fourth quarter of 2007 |
| Completion date of 1st carrier: | End of December 2007 |
| Completion date of 2nd carrier: | First quarter of 2008 |
| Specifications: | 2 Membrane type LNG carriers with a capacity of 145,700 m3 |
| Shipbuilder: | Daewoo Shipbuilding Marine Engineering Co., Ltd. |
| Ownership Ratio: | JSC Sovcomflot and NYK have each ownership of 50%. |
The Sakhalin II Project is a project for development of crude oil and natural gas conducted by Sakhalin Energy Investment Company Ltd in partnership with the Russian government. This project aims for development of the crude oil and natural gas reserves located northeast of Sakhalin Island for export to Japan and other countries in the Far East, and North America.