19 May 2022 12:21

NNK resumes oil production in northern Sakhalin, builds Sabo-Dagi pipeline

YUZHNO-SAKHALINSK. May 19 (Interfax) - NNK-Sakhalinmorneftegaz LLC (NNK-SMNG), a division of NNK Group, has resumed oil production in northern Sakhalin and built the Sabo-Dagi oil pipeline in the northern part of the island, Sakhalin Region Governor Valery Limarenko told members of the regional legislature on Thursday.

"The Sabo-Dagi oil pipeline has been built, connection has taken place. Pre-commissioning work is now underway. NNK management estimates [the pipeline will go into operation] by September. Oil production has already begun. Paperwork is being processed with [industrial safety watchdog] Rostekhnadzor," Limarenko said.

Approval has been received from the Sakhalin-1 project to include the new pipeline in the Sakhalin-1 infrastructure for transporting oil to the mainland, he said. "It was there from the start, a decision in principle, and now, apparently, already official," the governor said.

The Sakhalin-1 consortium and NNK might sign an agreement on this by July 1, the regional government's press service told reporters.

Limarenko also said that all jobs at NNK-SMNG have been preserved. The company's employees received wages during the construction of the pipeline and continue to be paid.

In July 2020, after an accident on the Okha - Komsomolsk-on-Amur oil pipeline that links the island and the Russian mainland, Sakhalinmorneftegaz, which belonged to Rosneft at the time, halted production. Rosneft said the temporary restriction on oil production on Sakhalin was due to obligations under the OPEC+ deal.

Rosneft announced in 2020 that it would optimize its portfolio of assets, and at the end of that year Eduard Khudainatov's NNK-Oil LLC acquired 9% of RN-Sakhalinmorneftegaz LLC; in October 2021, this stake increased to 100%, the Unified State Register of Legal Entities showed.

In February 2021, NNK-SMNG chief executive Ivan Taran said at a meeting in the Sakhalin regional legislature that NNK planned to invest up to 80 billion rubles in the Sakhalin business in the next few years, including 20 billion rubles in construction of a new oil pipeline in the northern part of the island that would be connected to the Sakhalin-1 consortium's pipeline infrastructure. At that time, the company planned to complete construction of the pipeline and resume oil production in the first quarter of 2022.

Sakhalinmorneftegaz produced 636,600 tonnes of oil and 276.7 million cubic meters of gas in 2020. In the preceding two years, the company annually produced about 1.2 million tonnes of oil and 370 mcm-400 mcm of gas. The gas was supplied to the two northernmost districts of Sakhalin.