Sakhalin LNG To Mexico.

Russian President Vladimir Putin and his Mexican counterpart, Vicente Fox, on June 21 discussed in Moscow Russia's plans to supply Mexico with LNG from Sakhalin Island in the Russian Far East. Putin was quoted as saying: "We are developing a series of major economic projects, including in the energy sector. I am pleased to say that liquefied [natural] gas will be delivered to the Mexican coast from Sakhalin, with part of it remaining in your country". Putin said Russia had other plans for co-operation with Mexico, including in the area of machine-building. (Fox on June 20 arrived in Moscow from Ukraine, where he began a regional tour aimed at building commercial ties in the former Soviet Union).

The Sakhalin-2 project, whose partners include Shell and Japan's Mitsui & Co. and Mitsubishi Corp., has reserves of about 150m tons of oil and 500 BCM of natural gas. Last October, the Shell-led Sakhalin Energy announced a deal to ship 37 million tons of LNG to a regasification terminal in Mexico over a 20-year period starting in 2008. That arrangement was the first aimed at channelling Russian LNG to the US, whose demand for natural gas is surging as domestic supply dwindles. There has been speculation that Russia's gas giant, Gazprom, will take an equity in Sakhalin Energy. But this will only happen if Shell and its partners agree to a Gazprom stake (see survey of Russia serialised in Vol. 63, Nos. 7-11, August/September 2004).