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Exxon won’t begin full Sakhalin exports until December

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Russia's technical standards agency, Rostekhnadzor, does not expect to clear the Sakhalin-1 project, led by Exxon Mobil, for full-scale oil exports at least until December, a Russian official said on Tuesday.

The news represents at least a 15-day delay from the agency's previous plan, announced at the end of September, and means the project will continue low-level shipments for another month or more despite healthy demand from Asian consumers.

"The deadline is December. I hope it will be met," Alexander Poleshchyuk, head of Rostekhnadzor in Russia's Far East, told Reuters.

Exxon's troubles on Sakhalin are seen as part of a broader Kremlin move to limit foreign control in the strategic energy sector, with the emphasis on the Royal Dutch Shell-led Sakhalin-2 oil and gas project.

Some analysts say official pressure on Exxon and some Russian firms over technical and ecological compliance are meant to show equal treatment for all companies, camouflaging attempts by the Kremlin to force Shell to cede a big part of Sakhalin-2.

Russian companies have no stake in Sakhalin-2, while Exxon has state-controlled oil firm Rosneft as a minority partner in Sakhalin-1.

Poleshchyuk said his agency had no major issues with Exxon despite delaying issuing clearances signalling that pressure on the project was set to subside.


"The Americans have speeded up work and things are going pretty well," he said.

Repeated delays to Sakhalin-1 oil exports have already upset Asian clients as the project is meant to represent the biggest addition to regional production in decades.

Exxon had initially planned to begin large exports in mid-2006 and reach peak production of 250,000 barrels per day by the end of this year.

This plan is being threatened by the recent developments as the group has managed to export only two trial 100,000-tonne cargoes over the past month despite having pre-sold five or six.

Poleshchyuk said a third trial tanker could load around mid-November. By comparison, the group's De Kastri terminal is due to load one cargo every four days when the project comes fully on stream.

One refiner in Japan, who bought a November loading cargo of Sokol crude from Sakhalin-1, said he had not been notified of any delivery delays.

Poleshchyuk said the newly built facilities of Sakhalin-1 should undergo more checks and added his inspection would not be the last, implying more possible delays.

He said he would visit the project's sites in mid-November, then probably issue a clearance, which in turn will serve a basis for a final state clearance. He did not say when final state approval would be granted.

Exxon has said it still expected to reach full production of 250,000 bpd by the end of this or early next year despite having produced only 30,000 bpd last month, according to Russia's energy ministry data.

© Reuters

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