Sakhalin-2 Reports 22 Percent Rise in Production

A consortium led by Shell reports that production offshore Russia’s Sakhalin Island has increased by 22 percent in 2001. They also reiterated plans to build the world's largest LNG plant. The Sakhalin-2 consortium, the biggest of Russia's few production sharing projects with foreign investors, said in a statement its production rose this year to 2.0 million tons from 1.67 million last year. Production is currently limited to the ice-free months of the cold Russian east, started producing on May 23 and closed the season on December 8. Oil is produced from Russia's first oil offshore platform, Molikpaq in the Sea of Okhotsk, and is exported to Korea, China, Japan and the United States. "The first phase of our project has shown we can deliver to markets in Asia" stated Sakhalin Energy CEO Steve McVeigh. "We will build on this success in our next phase of development, which will give customers in Asia the opportunity to access Russian gas supplies for the first time," he added. The second phase of the project is estimated at a cost to the consortium up to $9.0 billion. Sakhalin-2 is still committed to building Russia's first, and the world's largest, liquefied natural gas (LNG) plant on Sakhalin. First commercial deliveries of LNG to Asian consumers are due by November 2006.

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