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Sakhalin-1 Unable to Share Future Gas

ONGC of India put forward its own plan to sell gas under the Sakhalin-1 project, whereby the gas will be liquefied on Sakhalin-2 facilities and exported to India in the second move. But the opinion of other members of consortium, including the project operator ExxonMobil, is different. Similar to Gazprom, they think China should become the direction of first priority for the gas export.

Indian ONGC suggests liquefying the Sakhalin-1 gas on facilities of Sakhalin-2 and exporting it to India after it, Reuters reported Friday referring to a source in Indian oil ministry. The negotiations with Sakhalin Energy (the project operator under Sakhalin-2) have started and will continue till July 31, the source specified.

Sakhalin-1 declined to comment on the issue.

Sakhalin-1 was launched under the PSA in 1996. The recoverable reserves of three fields are estimated at 307 million tons of oil and 485 billion cu meters of gas. Though the industrial production has begun, the project capacity will be reached only in 2007. Exxon Neftegaz Ltd (subsidiary of ExxonMobil) holds 30 percent in the consortium. Other members are two subsidiaries of Rosneft (20 percent on aggregate), ONGC (20 percent) and Japanese Sodeco (30 percent).

It is yet unclear, how the consortium will settle its sales clashes. At present, the small amount of gas produced under Sakhalin-1 is shipped to the Khabarovsk Region. The daily output is due to step up to 7 million cu meters (2.55 billion cu meters a year) by 2010. This gas will go to domestic market as well, the more so that the parties have failed to shape the gas export program and the disputes obviously delay the elaboration.
© Kommersant

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