Shell's Sakhalin gas procurement project has signed a major supply deal with a Japanese company that effectively means that all of the project's LNG capacity has now been sold.

This deal with Japan’s fourth largest LNG buyer – Osaka Gas – represents the latest and last agreement for term sales of LNG from Trains 1 and 2 of the Sakhalin II plant. Sales of 98% of the combined future capacity of these two trains are now formalized, effectively selling-out the entire capacity of the foundation project.

Sakhalin Energy will supply to Osaka Gas about 0.20 million tonnes of LNG per annum for more than 20 years. With construction at the plant nearing completion, first deliveries of gas are forecast for 2008.

Japanese customers represent over 60% of the term sales from Sakhalin LNG. This reflects both the proximity of Sakhalin to Japan, as well as customer confidence in the Sakhalin II project and its shareholders, stated Ate Visser, commercial director of Sakhalin Energy.

He also expressed his confidence that, although capacity of the first two trains is now fully committed, LNG demand in the region remains strong and that Sakhalin II has the potential to grow further into a regional LNG hub.