Sakhalin Produces First Gas from LUN-A Platform at Lunskoye Field

Sakhalin Energy produced first gas from its Lunskoye-A (LUN-A) platform installed in the Lunskoye field 15 kilometers off the northeastern coast of Sakhalin Island.

Gas was produced from the first two gas wells which were completed last month. Production rates are being gradually increased with the gas being routed from LUN-A platform through the offshore multiphase pipelines to the Onshore Processing Facility (OPF). From there the treated Lun-A gas is being sent to the liquefied natural gas (LNG) plant in the south of Sakhalin via the TransSakhalin gas pipeline.

Tim Hake, Sakhalin Energy's Production Director said, "This is a critically important step in the on-going commissioning of all the new Sakhalin hydrocarbon facilities. It brings us very close to making this ambitious Project a reality. With the start of LNG production in the next few weeks Sakhalin will truly become the new Russian energy source for Asia Pacific."

All three Sakhalin II platforms, with almost five hundred personnel on rotation, are now on stream, and the TransSakhalin pipeline system is now carrying hydrocarbons from both Project fields -- Piltun-Astokhskoye and Lunskoye.

First gas from the Lunskoye field will be used for the final stages of commissioning at the LNG plant, substituting for the imported LNG, which was used previously.

This is the Company's third major achievement in the 2008/2009 winter season, following the first commissioning cargo from the new oil export terminal on December 12, 2008 and first oil from the Piltun-Astokhskoye-B (PA-B) platform on December 23, 2008.