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Signing of HOA for Purchase of LNG from Sakhalin II Project

February 09. 2007

On February 8, 2007, Osaka Gas signed the Heads of Agreement (HOA) for the purchase of LNG from Sakhalin II Project. According to the agreement between Osaka Gas and Sakhalin Energy Investment Company Ltd., the annual base volume of 200,000 tons would be delivered on FOB basis for the contract duration of 23 years starting in fiscal 2008.

This will be the first experience for Osaka Gas to procure LNG from Russian Federation. Upon signing of the HOA, the two companies will proceed with negotiations for execution of a sale and purchase agreement.

Based on its natural gas liquefaction plant located in Prigorodnoye, Sakhalin Oblast, Russian Federation, Sakhalin II Project will supply LNG mainly to Japan, Korea and North America with a maximum annual production capacity of approximately 9.6 million tons,.

Sakhalin Energy Investment Company Ltd.
Sakhalin Energy Investment Company Ltd. is a Russia-based company. After commissioning the LNG facilities, the company plans to supply LNG mainly to Japan, Korea, and North America. The company’s equity ownership consists of:
Shell Sakhalin Holdings B.V. (Subsidiary of Royal Dutch / Shell): 55%
Mitsui Sakhalin Holdings B.V. (Subsidiary of Mitsui & Co., Ltd.): 25%
Diamond Gas Sakhalin B.V. (Subsidiary of Mitsubishi Corporation): 20%

Osaka Gas Co., Ltd.
Osaka Gas is one of the largest gas utilities in Japan with its headquarters in Osaka, having the customer base of 6.7 million in the Kansai region. In FY2005 the company purchased a total of 6.79 million tons of LNG from the following countries (numbers in million tons): Australia (1.04), Brunei (0.83), Indonesia (2.88), Malaysia (0.94), Oman (0.68), Qatar (0.42).

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