Offshore Pipe Laying for Sakhalin II Completed Ahead of Schedule

In a season of milestone achievements, Sakhalin Energy has reached another significant milestone by completing the laying of its Piltun area offshore pipelines ahead of schedule, thus concluding all offshore pipelaying work for the Sakhalin II Phase 2 Project.

Sakhalin II Deputy CEO and Phase 2 Project Director David J. Greer underlined the importance of this achievement: not just for the Project, but also because it was achieved without impact to the Piltun environment, the area most sensitive to the Western Gray Whales (WGW).

An extensive noise monitoring campaign throughout the 2006 offshore season, also monitored in parallel by NGOs, showed that construction never exceeded the established noise criteria. With the work now finished ahead of schedule, the Company has been able to start demobilizing vessels in advance of original plans, effectively minimizing the overall acoustic footprint.

"All of Sakhalin Energy's efforts over the last few years, including our extensive investment, research and ongoing work with the independent WGW experts, bring us to where we are today – announcing that we have safely and successfully finished our offshore pipelaying work without having compromised the safety of the endangered Western Gray Whale", said David Greer. "This is something that the Company is extremely proud of."

Sakhalin II's offshore pipeline – consisting of extra-heavy pipe with thick concrete coating to ensure stability under all conditions – in water depth shallower than 30 meters has been buried in a deep trench to protect against ice scouring.

This year's offshore pipeline works followed on from the work Sakhalin Energy completed in summer 2005 in the Lunskoye area. The 2006 summer work has included dredging, installation and backfilling works on four separate pipelines: an oil and a gas pipeline from Chaiyvo beach to the new Piltun-B platform; and an oil and a gas line from Chaiyvo beach to the existing Piltun-A platform (Molikpaq). Total combined length of these pipelines exceeds 230 kilometers.

With pipelaying now complete, the only outstanding offshore pipeline work involves divers making the final connections between the pipelines and the platforms. This is planned to be done before the end of the 2006 offshore construction season and will be followed by hydrotesting of the pipelines.

The offshore pipeline work forms an important element of the Sakhalin II Phase 2 Project. Among other elements are Russia's first LNG plant, oil export terminal, onshore pipelines, two new offshore platforms and onshore processing facility. Overall design, procurement and construction work on the Phase 2 project is currently over 75% complete.