Sakhalin-2's 2013 budget totals $1.85 bln - source
MOSCOW. Dec 27 (Interfax) - The 2013 budget for the Sakhalin-2 project, which is being implemented under a production sharing agreement (PSA), will total $1.85 billion, a source close to the Energy Ministry told Interfax.
The budget was approved at a supervisory board meeting held at the end of December. Expenditures this year came to $1.6 billion in 2012.
The source said that the supervisory board looked into the development of the Yuzhno-Piltunskoye block at the Astokhskoye field (the fourth phase of the Sakhalin-2 project). Russia's Ministries of Energy and Natural Resources are for the development of this block but Sakhalin Energy has said that it currently does not have enough geological date for making an investment decision for this development.
"The start of production at the Yuzhno-Piltunskoye block remains an open issue. The Energy Ministry believes that once a license has been allocated, the resources should be used and developed in a rational way but, on the other hand, there is not enough geological information for a final investment agreement. Discussions are underway and a separate supervisory board meeting will be held on this issue," the source said, declining to clarify when the supervisory board would meet.
Sakhalin-2 is developing two oil and gas fields: Lunskoye with the assistance of the LUN-A platform, and Yuzhno-Piltunskoye with the assistance of the PA-A (Molikpak) and PA-B platforms. The next phase is the development of the Yuzhno-Piltunskoye block at the Piltun-Astokhskoye field. The company said that it is studying the set up of a fourth platform for development at the Piltun-Astokhskoye field. The decision to develop Yuzhno-Piltunskoye should be made by the shareholders and receive the approval of the supervisory board. An investment decision should be made by year's end.
The shareholders in Sakhalin Energy are gas giant OJSC Gazprom with 50%, British Dutch company Royal Dutch/Shell - 27.5%, Japan's Mitsui - 12.5%, and Mitsubishi - 10%.