ExxonMobil Expects to Begin Work at Sakhalin in October

Exxon Neftegas, operator of Russia's Sakhalin-I oil and gas field, will begin drilling operations in two offshore deposits in October, according to a statement by company president Neil Duffin. Exxon Neftegas will invest US $725 million this year in the first stages of development. This will cover modernization of the Orlan offshore platform in the Sea of Okhotsk east of Sakhalin, off Russia's Pacific coast. A contract to supply equipment for a coastal oil complex is to be completed later this year. Exploitation of the Chaivo oil field could begin at the start of the year once authorization is received from the Russian authorities.

Exxon Neftegas is currently engaged in talks on gas exports due to come online in 2008-10. Once negotiations are concluded, the company hopes to begin exporting to Japan in 2008.

The three offshore fields in the Sakhalin-I project, Chaivo, Odoptu and Arkutun-Dagi, are estimated to contain 307 million tons or 2.3 billion barrels of oil and 485 million cubic meters of gas.

The fields are to be operated by an international consortium in which ExxonMobil and Sakhalin Oil and Gas Development (SODECO) each hold a 30 percent stake. The other investors are ONGC Videsh and two subsidiaries of Russia's Rosneft. The consortium has already invested US $450 in a five-year drilling program. Overall investment in the project is expected to be around US $12 billion over 30-40 years.