29 Sep 2022 11:18

Russia's Energy Ministry counting on speedy resumption of production at Sakhalin-1

YUZHNO-SAKHALINSK. Sept 29 (Interfax) - Russia's Energy Ministry is working with companies participating in the Sakhalin-1 production sharing agreement project aimed at resuming output, Anton Rubtsov, director of the ministry's oil and gas complex department, told reporters on the sidelines of the Oil and Gas Sakhalin 2022 forum.

"The Energy Ministry, jointly with companies, is conducting the necessary work. As you know, Sakhalin-2 is currently providing gas [for consumers of the Sakhalin, Khabarovsk, and Primorye territories], and there will be gas from Gazprom [from the Sakhalin-3 project]. There is an understanding of what the options are for launching the [Sakhalin-1] project. We are counting on the actions being taken, resulting in a speedy resumption of this important Russian project," Rubtsov said at the forum.

When answering whether there was a risk of temporarily shutting down wells at Sakhalin-1, Rubtsov replied, "No, we are not considering this option."

Sakhalin Region Governor Valery Limarenko earlier during the forum said that oil and gas production at the project had been suspended. "Annual oil production at the project is expected to be 4.2 million tonnes from the originally planned 8.9 million tonnes," he said.

In turn, Andrei Okhotkin, commercial director of Sakhalin Energy, which is the operator of the Sakhalin-2 project, said that his company was ready to assist the Sakhalin-1 project in the matter of oil sales, so that it restores production volumes and continues to provide the region with gas.

"We suggested that the Energy Ministry consider the issue, perhaps to provide collegial assistance to the Sakhalin-1 project, which stopped suddenly, and for some reason does not want to start up for a long time. Gas cannot be supplied, because the oil tanks are full, thus production cannot continue correspondingly. We have offered, and we would be happy, to join and bring in focus the unsold volumes. We know the markets. We have the same carrier as Sakhalin-1, Sovcomflot. We know the ships, and the operations are known. We could very well become involved and help," Okhotkin said, adding that it would be difficult to provide the regions with gas only from Sakhalin-2 and Sakhalin-3 during the months of high consumption in November and December, as "it may simply not be enough".

As previously reported, Exxon Neftegas Ltd in April declared a force majeure, and began cutting oil output 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 at the required level of international standards for the offshore and oil industry". 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.

Rosneft , which owns 20% of the project, 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.