ExxonMobil Given Go-Ahead for Sakhalin Project

ExxonMobil has been given the go-ahead for a $12 billion project with its partners for the Sakhalin 1 project. An agreement was reached on Monday with the Russian government which will also pave the way to clear outstanding obstacles in the development of two other production-sharing agreements, at Sakhalin 2 with Shell, and in Kharayhiaga in north-west Russia with TotalFinaElf. ExxonMobil has a 30% interest in Sakhalin 1, Sodeko has a 30% interest, ONGC holds a 20% interest and a state-controlled Russian oil group holds the remaining 20%.

Reserves, off the north-east coast of Sakhalin island, are estimated at 2.3 billion barrels. The project will receive long-term stability in tax rates and commercial conditions, in exchange for substantial taxes and fees from oil revenues to the Russian government. Plans call for oil to be produced from a platform 14km offshore, as well as directly onshore using pioneering extended reach drilling up to 12km under the sea. The oil will be piped to the west of Sakhalin and then shipped to the mainland Russian port of Dekastri The Sakhalin 1 project should begin oil production in 2005.