4 Apr 2022 10:54

Exxon freezes Far East LNG project - governor

KHABAROVSK. April 4 (Interfax) - U.S. oil and gas major ExxonMobil has suspended the Far East LNG project, Khabarovsk Territory Governor Mikhail Degtyarev said.

"The project that the Americans, Exxon, announced in the port of De-Kastri with a pipeline from Sakhalin, it's been frozen until a further decision by them. Why this is being done astounds me, this is shooting oneself in the foot. There is gas, there's a coast, there are labor resources and investment, but they're freezing the project for political reasons," Degtyarev said on radio station Komsomolskaya Pravda.

The governor recalled that a month before Russia started its military operation in Ukraine he meet with Exxon representatives, who "expressed readiness, were doing pre-design work."

It was reported earlier that ExxonMobil subsidiary Exxon Neftegaz Limited (ENL), the operator of the Sakhalin-1 project, began a tender campaign in February to select contractors for the Far East LNG project. The company announced it was looking for contractors to assess the quality of construction materials, as well as producers of reinforced concrete products.

The construction of a liquefied natural gas (LNG) plant with annual capacity of 6.2 million tonnes near De-Kastri, Khabarovsk Territory is intended to monetize gas reserves off the coast of Sakhalin Island held by the Sakhalin-1 consortium. The cost of the project is estimated at $4.2 billion, the Energy Ministry said and the plant was expected to launch in 2027-2028.

TechnipFMC and Japan's JGC Corporation were supposed to carry out the front-end engineering design (FEED) for the plant.

Under the long-term program for the development of LNG production in Russia approved by the government, a project to expand the Far East LNG plant with additional capacity of up to 10 million tonnes could be implemented using Rosneft gas resources on the Far East shelf, the Veninsky block of fields with natural gas reserves of 578 billion cubic meters.

ExxonMobil announced on March 2 that it would withdraw from the Sakhalin-1 project and stop investing in Russia. ExxonMobil manages the project on behalf of an international consortium of Japanese, Indian and Russian companies, but in response to recent developments the company said it was beginning the process of winding down operations and working on steps to exit Sakhalin-1.

ExxonMobil has a 30% stake in Sakhalin-1, Japan's SODECO holds 30%, Rosneft has 20% and India's ONGC holds 20%. The project's fields have estimated reserves of 307 million tonnes of oil and 485 bcm of natural gas.