6 May 2010 17:40

Sakhalin-1 working group examines Exxon Neftegas plan, 2010 budget not approved

YUZHNO-SAKHALINSK. May 6 (Interfax) - The working group for the Sakhalin-1 production-sharing project, has once again examined the plan for workup of the project's fields and the work program proposed by project operator Exxon Neftegas, but did not agree them.

During the working group's session on April 29, Exxon Neftegas received proposals concerning the plan for working up the fields, which the project operator must examine.

"The process of discussing the working documents, specifically the plan for workup and production for the project continues. We have made our proposals to Exxon Neftegas and await a response," Romanov said. He declined to elaborate.

The working group is responsible for agreeing the documents that are examined by the authorized state body for Sakhalin-1. This includes agreeing work volumes and the 2010 budget.

Exxon Neftegas and the Energy Ministry first tried to agree the 2010 budget in December. The project operator proposed $3.8 billion to work up the Arkutun-Dagy, Odoptu and Chayvo fields. The Energy Ministry approved only $1 billion for Chayvo and Odoptu.

Romanov said the working group was unable to determine the date when the authorized state body would meet to examine the 2010 budget. "The date for the authorized body's session has still not been set," he said.

Sakhalin-1's operating plan for 2010 calls for beginning production at Odoptu, building a platform and other work toward development of Arkutun-Dagy.

The Energy Ministry has criticized Exxon Neftegas' performance on a number of occasions. It says the project has not been very profitable for the state and has proposed a review of the economic model.

The authorized body took several months to approve the project budget for 2009. As a result ENL had to halt work on developing Odoptu in February-April of that year. The budget was finally approved in April 2009 with spending totaling $2 billion.

Sakhalin-1 involves the phased development of three fields with reserves totaling an estimated 307 million tonnes of oil (2.3 billion barrels) and 485 billion cubic meters of gas (17 trillion cubic feet). Oil production under the project commenced in 2005 at Chayvo.

Sakhalin-1 participants include project operator Exxon Neftegas (30%), Rosneft (20%), ONGC (20%) and SODECO (30%).