The Sakhalin-II oil and gas project, which Gazprom is implementing with foreign partners on production-sharing terms off Russia’s Pacific Coast, will reach its full cost recovery in the first quarter of 2012, Energy Minister Sergei Shmatko said on Monday.

“We expect the project to reach full cost recovery in the first quarter of 2012, two years ahead of schedule,” Shmatko said.

Full cost recovery will allow the Sakhalin-2 partners to recoup their investment and start sharing profits from the project.

The Sakhalin II project includes the Piltun-Astokhskoye and Lunskoye oil and gas fields on Sakhalin Island's northeastern shelf, with recoverable reserves estimated at 150 million tons (1.1 billion bbl) of oil and 500 billion cubic meters of natural gas.

The minority partners in the project, Royal Dutch Shell, Mitsui and Mitsubishi, currently hold 27.5 percent, 12.5 percent and 10 percent stakes in the project respectively. Gazprom acquired a controlling stake (50 percent plus one share) in the project in December 2006.