ExxonMobil consortium to start drilling in Sakhalin-1
A consortium led by ExxonMobil comprising five international investors plans to start drilling in June for crude in
the Sakhalin-1 offshore oil and natural gas field. This is the first phase of the consortium's project to develop oil
and gas in the northeast offshore blocks, said a spokesman at Japan's Itochu, which owns a stake in Sakhalin Oil
& Gas Development Co., or Sodeco.
Sodeco holds a 30 % interest in the project, while US-based ExxonMobil owns a 30 % stake through its unit, Exxon
Neftegaz. The consortium expects to start commercial production in late 2005, with output expected up to the maximum
of 250,000 bpd of low-sulphur, light crude oil.
The consortium aims to supply the crude mainly to refiners in Japan, South Korea, and China, the spokesman said. In
the autumn of this year, the consortium will start construction work on a 220 km underwater oil pipeline running
across the Tatar Straits to DeKastri, on the Russian mainland.
The pipeline will transport oil from the offshore blocks including Odoptu, Chayvo, and Arkutun-Dagi to a tanker
terminal in DeKastri. For the second phase of the project, the five companies has completed feasibility study on a
natural gas underwater pipeline to Japan.
The consortium believes that delivering gas through a pipeline to Japan would be more economically viable than
exporting LNG with LNG tankers. Commercial gas production is set to start at the end of 2008.
The consortium is comprised of Exxon Neftegaz (30 %), Sodeco (30 %), India-based Oil & Natural Gas Corp.'s unit
ONGC Videsh (20 %), and local investors from Russia (20 %). Total project cost is estimated at $ 12 bn. Itochu holds
an 18 % stake in Sodeco, and Marubeni owns a 7.65 % share.
