Russia: No problems at Sakhalin-1, says ExxonMobil
PEAK production at the Sakhalin-1 project of 250,000 barrels a day (b/d) has been reached and Moscow is satisfied with the way the field is being developed, according to the project leader. "We're having no issues at this time whatsoever," Rex Tillerson, chief executive of ExxonMobil, told Petroleum Economist on the sidelines of an energy conference in Houston last month. "I think they [the Russian government] are happy with our performance."
Discussions with China National Petroleum Corporation (CNPC) over possible natural gas exports from Sakhalin-1, on Sakhalin Island in the country's far east, are continuing, following the signing last year of a heads of agreement for gas sales, Tillerson said. However, he added that the Sakhalin-1 consortium is considering other options and is holding talks with potential customers in Japan and India. India's Oil and Natural Gas Corporation has in the past expressed an interest in liquefying Sakhalin gas for export.
Tillerson, meanwhile, seems confident the ownership structure and operating terms of the Sakhalin-1 project are safe from interference from the Russian authorities, even though, last year, the foreign companies developing the nearby Sakhalin-2 project were forced to hand a majority share of that project to Gazprom.
Unlike Sakhalin-2 before Gazprom's forced entry, however, Sakhalin-1 involves two Russian partners – subsidiaries of state-owned Rosneft – and has not suffered embarrassing cost overruns. Exxon Neftegas, Sakhalin-1's operator, says the project will generate more than $50bn for the Russian state over its lifetime.
Sakhalin-1, which involves the exploitation of three offshore fields, Chayvo, Odoptu, and Arkutun Dagi, began producing oil and gas in October 2005, with gas deliveries being made to Russia's Khabarovsk region and oil being exported through the De-Kastri oil terminal on Russia's east coast. Recoverable resources are estimated at 2.3bn barrels of oil and 17.1 trillion cubic feet of gas.
ExxonMobil holds a 30% share in the project. Its partners are: India's ONGC Videsh (20%); Sakhalin Oil and Gas Development (30%), a group of Japanese companies, including JNOC, Japex, Itochu and Marubeni; and the Rosneft subsidiaries Sakhalinmorneftegas-Shelf (11.5%) and RN-Astra (8.5%).