Exxon CEO: Sakhalin-1 Already Reached Peak 250,000 b/d Output

Exxon Mobil Corp. (XOM) has already reached its target of producing 250,000 barrels a day from the Sakhalin-1 project in Russia's far east, chief executive Rex Tillerson said Tuesday.

"We're there today," he told reporters after delivering a speech at the Cambridge Energy Research Associates conference.

Exxon's fourth-quarter production of oil and natural gas increased by 6%, reflecting new output from major investments like Sakhalin-1. In a recent earnings conference call, Exxon executives said they hoped to reach the 250,000 barrels a day target by the end of the first quarter.

Turning to Indonesia, Tillerson said the Natuna contract with the state energy company Pertamina was "still in force." Discussions with Pertamina "continue to be ongoing," the executive said. "I'd expect any parties interested in Natuna to be aware of that."

According to media reports out of Jakarta, Pertamina may cooperate with Statoil ASA to develop the Natuna D-Alpha gas block, which has been frozen by the government's unilateral declaration that Exxon Mobil's contractual right to develop the block expired in 2005.

Government officials accused Exxon Mobil of failing to develop Natuna over the past 20 years of the previous contract. Pertamina holds a 24% ownership share in Natuna compared to Exxon Mobil's 76% stake. Natuna is estimated to contain 46 trillion cubic feet of recoverable gas reserves.

Meanwhile, Tillerson said Exxon is still waiting to hear from Venezuela's government about its plans for the Orinoco river basin. "We don't have any details yet," he said. The company expects that at some time, "the oil ministry will be contacting us to sit down."

Discussions for the transformation of the Exxon-operated Cerro Negro project into a joint-venture controlled by the Venezuelan government are in progress, an Exxon executive said during a conference call earlier this month. The company has said it is seeking an amicable resolution.

Rising nationalist rhetoric by Venezuelan officials has fostered concerns about the tone of the negotiations with major oil and gas companies operating in the Orinoco belt.

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