Sakhalin I
The Sakhalin I project is being led by Exxon Neftegaz, in conjunction with consortium members SODECO, ONGC Videsh, Sakhalinmorneftegaz, and RN Astra. The consortium members started drilling in May 2003 and expect preliminary oil production of 250,000 barrels per day (bbl/d) in October 2005. The projects oil output will be piped westward to the Russian port of De-Kastri and pumped into the Russian system. The first phase of the project will entail development of the Chayvo field, and subsequent phases will develop the Odoptu and and Arkutun Dagi fields. Onshore processing facilities were completed to process the oil and natural gas from the field at a rate of 250,000 bbl/d and 800 million cubic feet per day (mmcf/d). The oil and natural gas will then be piped to the Russian mainland to the export terminal of DeKastri. Planned exports of oil to world markets, with the assisstance of ice-breaking vessels, is scheduled for 2006. Sakhalin Is natural gas is expected to be sent southward to Japan via a proposed pipeline. The partners are planning for natural gas exports to Japan to begin in 2008. Sakhalin-1 will be the largest single foreign direct investment in Russia. Capital investment over the life of the project could reach as much as $12 billion. To date, the Consortium has spent over $ 2.6 billion on various exploration activities, environmental studies, engineering design studies, infrastructure improvements, taxes and other expenditures.
Sakhalin II will also be used to supply natural gas to the United States. In late 2004, Sakhalin Energy signed a contract with Coral Energy to supply 1,800 billion cubic feet (bcf) of LNG over 20 years to a power plant on the border of California and Mexico. The LNG will be delivered via tanker to the Energia Costa Azul terminal being constructed in Baja California, Mexico. In March 2004, Sakhalin II announced the sale of 300,000 tons of LNG per year to Japans Tokyo Gas and Tokyo Electric Power (TEPCO) starting in summer 2008. In July 2005, the project operators announced a 20 year sales agreement of 1.6 million tons per year of LNG to Korea Natural Gas (KOGAS). Some of these contracts have had to be renegotiated as the target start date for LNG exports has been delayed from late 2007 to mid 2008. The delays are mainly due to environmental hurdles and to rising costs. A recent report by the World Conservation Union expressed concern that a planned pipeline route from Sakhalin Island to Japan (see map) would harm Pacific gray whales. The consortium members had expected around $5 billion in loans through 2006, but with the Phase II (LNG project and year-round oil production) cost raised above $20 billion, Sakhalin Energys CEO announced that those loans would not be forthcoming as early as the projects operators had hoped. For these reasons, LNG production has been delayed until at least 2008, and year-round oil production has been delayed until at least 2007. Sakhalin II began crude oil production during 1999, averaging 80,000 bbl/d of production during July 2005. Completion of Phase II (sometime during late 2007) would increase daily production from Sakhalin II to around 180,000 bbl/d.
Sakhalin Islands oil and gas resources are being developed by international consortiums. Sakhalin Its oil production will begin in October 2005 at 250,000 bbl/d. Sakhalin II produces oil for six months of the year at a rate of roughly 80,000 bbl/d. Sakhalin Island, a former penal colony located off the east coast of Russia and to the north of Japan, holds vast hydrocarbon resources. International consortia of energy companies have entered into production sharing agreements (PSAs) to develop the resources. Oil reserves in the area are estimated at around 14 billion barrels, and natural gas reserves at approximately 96 trillion cubic feet. Even though all of the consortia have extensive export plans (including to the United States) via LNG terminals and export pipelines to the mainland, there has been little progress except on the first two parts of Sakhalin Island: Sakhalin 1 and Sakhalin 2. These lie to the southeast of Okha .