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 .