RusEnergy

16 June 2008 - Upstream OnLine - WorleyParsons confirmed today that it is preparing to start work on the key front-end engineering and design contract worth A$150 million (US$140 million) for the ExxonMobil-led Arkutun-Dagi development in the Sakhalin 1 project area off Russia’s east coast. The award, which was reported by Upstream last month, covers the centerpiece of the Arkutun-Dagi project, a giant production platform that will probably be a gravity-based structure with a 35,000-tonne topsides. WorleyParsons said it will be one of the largest floatover platforms in the world. ExxonMobil's offshoot in the area, Exxon Neftegas, awarded the deal to Sakhneftegaz Engineering, a Russian company owned 49% by WorleyParsons and 51% by a subsidiary of Russian outfit Zarubezhneft. ExxonMobil has approved A$28 million for initial engineering studies to be performed under this contract in 2008. Sakhneftgaz estimates that the value for services could total A$150 million over five years. Sakhneftgaz will provide overall project management services with co-ordination of subcontracts to be awarded to multiple third parties, including Russian design institutes. The project will be carried out from Moscow and Houston with additional support from Worley’s global resources in Perth, Melbourne, London, Beijing and California, the Australian company said in a statement today. Exxon Neftegas is the operator of Sakhalin 1 with a 30% interest. Its partners are Japan's Sakhalin Oil&Gas, also with a 30% stake, India's ONGC Videsh on 20% and Russian pair Rosneft and Sakhalinmorneftegas-Shelf, holding 8.5% and 11.5% respectively. The Arkutun-Dagi field is understood to be third in line for development at Sakhalin 1 after the Chaivo and Odoptu fields. These are giant fields with combined potential recoverable reserves of 2.3 billion barrels of oil and 17.1 trillion cubic feet of gas. “I am very pleased that Exxon Neftegas has chosen to work with Sakhneftegaz on this strategically important project. Arkutun-Dagi continues our company’s participation in projects at Sakhalin Island that dates back over the past 10 years,” Worley’s chief executive John Grill said.