New criteria for Sakhalin-1 participation must be met by Indian, Japanese cos under new order
MOSCOW. Sept 19 (Interfax) - The updated criteria for participation in Sakhalin-1 spelled out in August must be met by the Russian offshore oil and gas project's Indian and Japanese participants.
Prime Minister Mikhail Mishustin signed an order (No. 2559-r) on September 18 stipulating that these conditions must be met by Sodeco (Sakhalin Oil & Gas Development Co. Ltd., the shareholders of which are Japex, the government of Japan, Itochu, Marubeni and Inpex) and India's ONGC Videsh Limited. The document has been posted on the official website for legal information.
Exxon Neftegas Ltd, the former operator of the project, is not mentioned in the new order.
President Vladimir Putin issued a decree in August adding to the list of requirements for foreign participants in the project. Specifically, they must enter into contracts for the delivery of foreign-made equipment and spare parts for it that are needed to implement the production sharing agreement (PSA), as well as contracts on technical cooperation.
Another condition is that foreign members of the consortium carry out "actions that led to the lifting of political and economic sanctions imposed by foreign nations that negatively affect the execution of the PSA, including their legal appeal if necessary."
They must also independently or through other parties deposit money into Sakhalin-1 LLC's liquidation account in an amount equal to that which was previously accumulated by the relevant participant in the liquidation fund of the PSA (fund for subsequent clean-up of the impact of operations).
Russian company Sakhalin-1 LLC has been the operator of the eponymous PSA project since October 2022, when Putin signed order to transfer the operatorship from Exxon Neftegas Limited. The LLC is managed by Sakhalinmorneftegaz-Shelf, a subsidiary of Rosneft that was allocated a stake of 11.5% in the new company (in proportion to its stake in the PSA); 8.5% went to JSC RN-Astra.
Japan's Sodeco (30%) and India's ONGC (20%) agreed to receive proportionate stakes in the new operator. But ExxonMobil announced its exit from the project and Russia in general.
It was reported earlier that ONGC was having problems formalizing its stake in the new project operator. It received its share of the project's liquidation fund, 143.24 billion rubles or about $1.4 billion, back in April 2023, but was unable to transfer it to Sakhalin-1 LLC due to sanctions imposed on Russian banks and Russian countersanction measures.
Sakhalin-1 includes three oil and gas fields: Chaivo, Odoptu and Arkutun-Dagi off the northeast coast of Sakhalin Island. Their combined reserves are estimated at 307 million tonnes of oil and 485 billion cubic meters of natural gas. Production at Sakhalin-1 peaked at 12.96 million tonnes per year in 2019, after which it started to decline, dropping to 12.44 million tonnes in 2020 and 11.3 million tonnes in 2021. Exact production figures at the project for 2022-2024 have not been published.
