GE Secures 16-Year Contract for Sakhalin LNG

The development of the Sakhalin-2 LNG project continues to gain in momentum as GE Oil & Gas announced today that it had been awarded a 16-year extension of its contract.

The contract will see GE maintain four gas turbines that drive the process trains at the Sakhalin liquefied natural gas plant in Russia. Five gas-powered turbines, which are used to produce electricity at the site, are also covered by the agreement.

The contract extension, valued at $333 million, will ensure that production will continue at the LNG plant—the first and only LNG plant of its kind in Russia—until 2032. GE's current contract was due to expire in 2016.

"The 16-year extension is testament to our ability to deliver technological innovation and guarantee availability under the most challenging circumstances,” Girish Saligram, head of contractual services for GE Oil & Gas’ Global Services business, said in a statement. "While Russia continues to invest in the industry, few customers wish to engage in long-term partnership, but Sakhalin Energy recognises the value of such a relationship."

The contract agreement was announced today at the Russia Power conference in Moscow. At the same event, GE also announced that it had signed a Memorandum of Understanding (MoU) with Sakhalin Energy to help develop more power facilities to Sakhalin Island. Development will include aeroderivative gas turbines, gas engines, coal gasification and wind power.

Sakhalin Energy, a consortium of four companies, is the operator of the field. Russian gas giant Gazprom holds a 50 per cent stake in the consortium minus one share. Shell holds a 27.5per cent share minus 1 share. Japanese trading and investment conglomerate Mitsui holds a 12.5 per cent stake with Diamond Gas, a subsidiary of Mitsubishi, holding the remaining 10 per cent.