Sakhalin-1 project to produce first oil, gas on weekend - 30 September, 2005

The Sakhalin-1 oil and gas project operated by Exxon Neftegaz Limited (ENL) will start producing the first crude and gas over the weekend. ENL said the Yastreb (Hawk) platform on the northeastern coast of the island will begin on Saturday to pump hydrocarbons from the Chayvo field on the shelf of the Sea of Okhotsk. Ten inclined 8 to 11-km long wells have been drilled to the deposit.

At the same time the Orlan platform is drilling 20 vertical wells to the reserves. Exxon Neftegaz said it had completed on Friday connecting its pipelines to Russian trunklines going from Sakhalin to Komsomolsk-on-Amur and De-Kastri settlement in Khabarovsk region.

Sakhalin-1 annual production is to comprise 12.5 million tons. South Korea is building five tankers on Russian orders with a displacement of 100 thousand tons each for transportation of the crude.

ENL Vice-President Mark Hackney told Tass natural gas from Chayvo will be used mostly for the needs of Khabarovsk region. By 2009 gas sales to the region will reach three billion cubic meters a year.

Besides Chayvo, Exxon Neftegaz and its partners are developing the Odoptu and Arkutun-Dagi fields in the northeastern shelf of Sakhalin. Potential reserves of the fields are estimated at 307 million tons of oil and 485 billion cubic meters of gas. Capital investments into the development of all fields of the Sakhalin-1 project are estimated at over 12 billion US dollars.

Production of hydrocarbons has been going on since 1999 at the Piltun-Astokh oil field of the Sakhalin-2 project. The Molikpak platform of the Sakhalin Energy Company is engaged in production. From 2008 five platforms will extract oil and gas on the Sakhalin shelf. The island will annually deliver to the world market over 20 million tons of oil and 9.6 million tons of liquefied natural gas, Itar-Tass reports.