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  Sakhalin II is a project initiated by the Sakhalin Energy Investment Company Ltd. (Sakhalin Energy), focusing on comprehensive development of oil and natural gas resources off the coast of Sakhalin. Mitsubishi Corporation (MC) has a 10 percent ownership stake in the Sakhalin Energy. Other shareholders are Gazprom (50% plus one share), the Royal/Dutch Shell Group of Companies (27.5% minus one share) and Mitsui & Co., Ltd. (12.5%). As a shareholder in Sakhalin Energy, MC's Sakhalin Project Unit is involved in all phases of the project, from upstream development and financing negotiations, to downstream operations and marketing for crude oil and liquefied natural gas (LNG). This Unit also controls and coordinates the activities of Diamond Gas Sakhalin B.V., a wholly owned subsidiary established by MC for the purpose of participating in the Sakhalin Energy consortium.In the first phase of the project, commercial production of crude oil began in the summer of 1999; in 2005, operations have again proceeded smoothly, with production getting underway in June. On May 15, 2003, Sakhalin Energy's shareholders decided to make further investments in the second phase of the Sakhalin II Project, the development of Piltun-Astokhskoye. Following this decision, Sakhalin Energy announced to the Russian government implementation of development plans based on a Production Sharing Agreement (PSA). With this announcement, Sakhalin Energy has moved into full-scale development, leading to year-round production of crude oil and the commencement of shipping of LNG. The project's very large recoverable reserves of 1.1 billion barrels of crude oil/condensate and 17 trillion cubic feet (TCF) of natural gas, its geographic proximity to the Asian market, and the fact that this development is based on Russia's first PSA, all make the Sakhalin II Project one of historic significance for Japan's energy sector, and the Sakhalin Project Unit is dedicated to making this landmark project a success.  Sakhalin II Project  Sakhalin Energy Investment Co., Ltd. 
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