Oil majors set to invest $ 4 bn in Sakhalin oil and gas projects

Nov 20, 2003 01:00 AM

Major oil companies are set to invest $ 4 bn on two huge oil and gas projects in Sakhalin, off eastern Russia, next year and have spent $ 3 bn this year on offshore platforms, double-hulled tankers and a LNG terminal.
Two consortia, led by Shell and ExxonMobil, are gearing up to spend a further $ 4 bn on their Sakhalin projects after spending $ 1 bn in 2002 and just over $ 3 bn this year, said Galina Pavlova, director of the oil and gas industry department for Sakhalin. The money will go on new offshore platforms, double-hulled tankers, ice breaking vessels, trunk pipelines, onshore processing terminals and other infrastructure projects on the island.
“This year there was the start of development of the Lunskoye field and three gas contracts were signed on Sakhalin II. On Sakhalin I there is a long-term construction plan and drilling has begun on the Chayvo offshore field,” said Dr Pavlova.

Exxon Neftegaz heads up the Sakhalin I consortium and Chayvo's development. It plans to build a pipeline across the Gulf of Tartary to the new DeKastri terminal, on the Russian mainland, and have tankers sailing through pack ice from 2005.
“Phase I investment will be $ 5 bn with $ 1.8 bn spent so far. Russian content is key to the project with more than $ 2.3 bn in local contracts awarded to date,” said Stephen Terni, president of Exxon Neftegaz. “Drilling started on the first Chayvo well with the Yastreb land rig in September. The Orlan drilling platform, used in Alaska, is being modified by Amur Shipyard for Chayvo and overall is 50 % completed.”

Exxon Neftegaz has ordered a single point mooring system and the design for ice resistant double-hulled aframax tankers for Sakhalin I. Shell has also made progress on Sakhalin II.
“We had a busy summer awarding $ 5 bn in contracts, including the main engineering, procurement and construction awards,” said Steve McVeigh, CEO of Shell's consortium Sakhalin Energy Investment Co. “So far we are achieving 75 % Russian content on man-hour and material utilisation.”

Source: Gateway To Russia
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