Oil output at Sakhalin-1, Sakhalin-2 stable in 2024, gas production at Yuzhno-Kirinskoye field might start in 2027-2028 - governor

MOSCOW. Oct 2 (Interfax) - Oil and gas production at Sakhalin projects being developed under production sharing agreements is stable, Sakhalin Region Governor Valery Limarenko said at the Sakhalin Oil and Gas forum.

"Oil production at the Sakhalin-1 and Sakhalin-2 projects totalled 11.3 million tonnes in 2023 and grew by almost 37% compared to 2022. In 2024, Sakhalin-1 and Sakhalin-2 are also demonstrating stable operations, hydrocarbon production is proceeding according to the outlined plans for the development of the fields," Limarenko said.

Sakhalin-1 is developing the Arkutun-Dagi, Chaivo and Odoptu oil and gas fields. The project reached peak oil production of 12.96 million tonnes in 2019, after which output declined to 12.44 million tonnes in 2020 and 11.3 million tonnes in 2021. Exact data on oil production at the project in 2022 and 2023 have not been published.

Sakhalin-2 is developing the Piltun-Astokhskoye and Lunskoye fields off the coast of Sakhalin Island.

The operators of the two projects, Exxon Neftegas Ltd and Sakhalin Energy Investment Company Ltd, were replaced by Russian legal entities Sakhalin-1 LLC and Sakhalin Energy LLC, respectively, in 2022.

Meanwhile, gas production at the Yuzhno-Kirinskoye oil and gas condensate field being developed under the Sakhalin-3 project is expected to begin in 2027-2028, Limarenko said.

"The development of the Yuzhno-Kirinskoye field is proceeding. It is planned that the first gas will come in 2027-2028. After the Sakhalin-3 project reaches design capacity, gas production will amount to 10 billion cubic meters per year," he said.

The oilfield infrastructure at Yuzhno-Kirinskoye is being built by RusGazShelf, Gazprom's EPC contractor for the Sakhlin-3 project. Production was scheduled to start at the end of 2026 at the earliest.

Yuzhno-Kirinskoye, discovered by Gazprom, is the largest field in the Kirinsky block, with C1+C2 recoverable reserves estimated at 814.5 bcm of gas, 130 million tonnes of gas condensate and 3.8 million tonnes of oil. The planned design capacity is 21 bcm of gas per year.

Sakhalin-3 includes three licensed oil and gas blocks: Kirinsky, Ayashsky and Vostochno-Odoptinsky. The Kirinsky block includes the Kirinskoye, Yuzhno-Kirinskoye, Yuzhno-Lunskoye and Minginskoye fields, but only the Kirinskoye field is being tapped at the moment. Sakhalin-3 gas is the main resource base for the Sakhalin-Khabarovsk-Vladivostok gas transport system.

Gazprom is expected to complete the investment rationale for a project to build a plant to process gas condensate on Sakhalin next year, Limarenko said. "Gazprom is now working on the investment rationale [for the plant]. This work will conclude next year," he said, recalling that the resource base is supposed to be the Sakhalin-3 project.

"In addition, Gazprom is considering other options for processing hydrocarbons and plans to come out with concrete proposals and decisions next year. We expect that this strategy will include the matter of processing on Sakhalin," Limarenko said.

The governor said in May 2022 that the investment rationale for an oil refinery with capacity to produce 4.5 million tonnes of oil products per year was expected to be prepared by March 1, 2023 and that Gazprom would make a decision on the fate of the project based on this document.

At a meeting with President Vladimir Putin in February 2023, Limarenko said work on the feasibility study had been completed and the investment rationale stage was beginning. He said the project would make it possible to supply jet fuel for Far Eastern airline Aurora and also produce gasoline.

The refinery is supposed to be built in the area of the Poronaisk seaport on the eastern coast of Sakhalin, where an oil product handling facility will be built, Limarenko said.