Russia's Energy Ministry counting on resuming oil output at Sakhalin-1 project by end of year
VLADIVOSTOK. Sept 7 (Interfax) - Russia's Energy Ministry is counting on oil output at the Sakhalin-1 project resuming before the end of the year, Energy Minister Nikolai Shulginov said at a media briefing during the Eastern Economic Forum 2022.
"Oil production at Sakhalin-1 has nearly stopped, while gas production continues. We will try to make this project work, though much depends on the position of Exxon, since the company is the operator. There are difficulties, though we believe that some kind of resolution will be found," Shulginov said at the briefing.
"We would like oil production at Sakhalin-1 to be restored by the end of the year," Shulginov added.
As previously reported, Exxon Neftegas Ltd in April declared a force majeure, and began cutting oil production at the production sharing agreement project "owing to recent events that prevent or delay the company's fulfillment of its obligations under agreements and operations." Exxon reported a drop in output of 30,000 barrels of oil equivalent per day at its Russian assets for the second quarter of this year, after having produced 56,000 boe per day in 2021.
ExxonMobil in August said in a report that it was transferring the company's rights under the Sakhalin-1 PSA project to an unnamed third party. Russian President Vladimir Putin the following day signed a decree prohibiting shareholders from so-called unfriendly countries from buying and selling stakes in strategic enterprises and joint-stock companies of the Russian Federation and in a number of other projects until December 31, 2022, including Sakhalin-1.
Deputy Prime Minister Alexander Novak in early September said that Exxon Mobil had not applied to the Russian government for special permission to exit the PSA project. The previous day, The Wall Street Journal, citing Exxon's Corporate Media Relations Manager Casey Norton, reported that the company had recently sent a notification of disagreement to the Russian authorities regarding the said presidential decree. The notification set a deadline when the respective parties must reach an agreement; otherwise, the case could go to court.
The Sakhalin-1 project comprises ExxonMobil with a 30% stake, Japan's SODECO with a 30% stake, Rosneft with a 20% stake, and India's ONGC with a 20% stake. The project's total field reserves are estimated at 307 million tonnes of oil and 485 billion cubic meters of natural gas, and the annual production volume is 11.3 million tonnes of oil.
Rosneft in early August reported that oil production had not yet resumed at Sakhalin-1, the tanks of the De-Kastri terminal were 95% full, and oil was not being shipped.
