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Wednesday, November 14, 2007

Sakhalin-1 Launches Production

ARCHIVES Kommersant - OCTOBER 2005 - Commercial oil/gas production from Chaivo field, Sakhalin-1 consortium, started on Saturday, October 1, 2005. The crude oil from the field will be exported to Asian and Pacific countries. For the natural gas, no sales market has been determined yet with Khabarovskenergo and Khabarovskkraigaz as the sole clients and the management plans on Chinese shipment still undecided. Stephen Terni, president at Exxon Neftegaz Limited (subsidiary of ExxonMobil, Sakhalin-1 project operator), announced Saturday the Chaivo field will daily produce 6,300 tons of crude and 1.7 million cub m of gas by the end of this year and pile up production to 33,000 tons of crude and 7.1 million cub m of gas at close of the next year. At first, the crude will be sold in Russia (for instance, to Rosneft) with the export launch slated for the mid.-2006. Sakhalin-1 project covers three shelf fields of the northeastern Sakhalin – Chaivo, Odopty and Arkutun-Dagy and is implemented under the PSA of 1995. Exxon Neftegaz Limited holds 30 percent in Sakhalin-1, Japanese SODECO owns another 30 percent, Indian ONGC Videsh – 20 percent. Russian Rosneft holds the 20 percent interest via its subsidiaries – Sakhalinmorneftegaz-Shelf and RN-Astra. The aggregate recoverable reserves equal 307 million tons of crude and 485 billion cub m of gas; the required investment is estimated at $12.8 billion for the whole life of the project. Originally, the Sakhalin-1 project was targeted at the gas market of Japan, but failed to catch up with Sakhalin-2, which operator Sakhalin Energy was the first to clinch the contracts with Japan, meeting the LNG requirements of the latter till 2013. Therefore, Exxon Neftegaz is aggressively looking for other sales markets now. The talks with Chinese CNPC may finalize already next year. As reported earlier, the company intends to annually pump 8 billion cub m of gas through the yet in project Okha (Sakhalin)-Komsomolsk-on-Amur-Khabarovsk-China pipeline, which Exxon Neftegaz is designing. At present, the gas could be shipped only from Okha to Komsomolsk-on-Amur via a pipeline of 1-billion cub m annual capacity, which is to reach Khabarovsk before late 2006. The pipeline is constructed by Daltransgaz, where Russian Property Ministry owns 27.63 percent, Khabarovsk Region’s Property Ministry - 47.24 percent, Rosneft -14.32 percent, Rosneft-Sakhalinmorneftegaz – 10.68 percent, Perm Region’s authorities – 0.13 percent. In February, however, Rosneft President Sergey Bogdanchikov announced the intention to withdraw from Daltransgaz and offered the share to Russian gas monopoly Gazprom. The crucial hurdle was that Gazprom agreed to lay the pipe only to Khabarovsk, not to China and, therefore, faced strong opposition of the partners. The talks proved fruitless and Khabarovsk pipelining is likely to drag on, as the regional authorities lack the funds to independently construct the pipeline.

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