Identifier
Created
Classification
Origin
08MOSCOW349
2008-02-08 15:10:00
CONFIDENTIAL
Embassy Moscow
Cable title:  

(C) SAKHALIN ENERGY SEEKS QUIET WITHDRAWAL OF EXIM

Tags:  EPET ENRG ECON PREL RS 
pdf how-to read a cable
VZCZCXYZ0001
PP RUEHWEB

DE RUEHMO #0349 0391510
ZNY CCCCC ZZH
P 081510Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6499
INFO RUEHLO/AMEMBASSY LONDON PRIORITY 2091
RUEHKO/AMEMBASSY TOKYO PRIORITY 4172
RHEHNSC/NSC WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
C O N F I D E N T I A L MOSCOW 000349 

SIPDIS

SIPDIS

DEPT FOR U/S JEFFERY
DOC FOR 4231/IEP/EUR/JBROUGHER

E.O. 12958: DECL: 02/04/2018
TAGS: EPET ENRG ECON PREL RS
SUBJECT: (C) SAKHALIN ENERGY SEEKS QUIET WITHDRAWAL OF EXIM
APPLICATION


Classified By: Ambassador William J. Burns for reasons 1.4 (b) and (d)

C O N F I D E N T I A L MOSCOW 000349

SIPDIS

SIPDIS

DEPT FOR U/S JEFFERY
DOC FOR 4231/IEP/EUR/JBROUGHER

E.O. 12958: DECL: 02/04/2018
TAGS: EPET ENRG ECON PREL RS
SUBJECT: (C) SAKHALIN ENERGY SEEKS QUIET WITHDRAWAL OF EXIM
APPLICATION


Classified By: Ambassador William J. Burns for reasons 1.4 (b) and (d)


1. (C) Shell has informed us that it and the other Sakhalin-2
partners (Gazprom, Mitsu and Mitsubishi) are reconsidering
their need for export credit guarantees from a consortium of
three export credit agencies: U.S. EXIM, the UK's ECGD, and
Japan's JBIC. On February 5, the partnership, Sakhalin
Energy Investment Corporation (SEIC) convened a shareholders
meeting at which the decision to unwind the long-running
applications to the three agencies was unanimously agreed.
(Note: EBRD had been a fourth guarantor but pulled out in

2007. End Note.) Our contacts in Shell tell us that Gazprom
and the Japanese firms, however, had two conditions, that the
package be redone as a bilateral deal with JBIC and that the
process be done quietly.


2. (C) According to our Shell sources, SEIC needs time to
unwind the legal and financial links in the current
multilateral package in order to transform it into a
bilateral package with JBIC. To that end, we understand that
SEIC subsequently contacted EXIM, ECGD, and JBIC requesting a
delay in any pending decisions on the applications. We
understand SEIC also verbally communicated to EXIM (and
presumably the others) its intention to withdraw the
applications from EXIM and ECGD while still going forward
with the JBIC loan application.


3. (C) Shell informed us on February 8 that SEIC intends
immediately to visit JBIC at the CFO level to begin
restructuring a JBIC-only package. (Note: JBIC would be the
guarantor of by far the largest portion of the $6.7 billion
in export credit guarantees sought by SEIC.) SEIC hopes this
process can be complete by the end of April.


4. (C) The Ambassador discussed these developments with his
British and Japanese counterparts this week, and they agreed
that a non-public, graceful closure of the applications is
the best way forward at this time. The Japanese Ambassador
stressed that JBIC has always intended to go through with its
financing and would appreciate U.S. and UK support for a
quiet exit by EXIM and ECGD.


5. (C) Post urges Washington agencies to support a delay in
EXIM's decision on this application and to keep the process
non-public and smooth while pressing SEIC to bring this
"managed exit" to a conclusion as quickly as legalities and
fiduciary responsibilities permit.
BURNS