Photo shows Sakhalin II, Russia’s first liquified natural gas project. Courtesy of Gazprom.

Hi John,

I case you haven’t seen it, looks like there has been a corruption conviction involving Sakhalin II.  Although the story below does not mention Sakhalin II by its exact name, the story says the project “is one of the largest integrated oil and gas projects in the world and involves the exploration and development of several different oil and gas fields in the Sea of Okhotsk off Sakhalin Island (part of the Russian Federation).”

http://www.egovmonitor.com/node/45943

That is how Sakhalin Energy describes the project, so I am sure its Sakhalin II!

Prison terms for corruption in oil and gas contracts

31 January 2012

By ALEXIS FLYNN

LONDON—BP PLC said it will end its 13-year alliance with Russian state-owned oil company OAO Rosneft to explore for oil and gas in Sakhalin, due in part to the economics of the Far East project.

The U.K.-based energy producer said that in recent meetings with the shareholders and board of ZAO Elvary Neftegaz it confirmed its intention to exit the joint venture. “There are many reasons for this decision, including the challenging economics of the discovered resource in the KV [Kaigansky-Vasuykansky] block,” BP said Friday.

The company first formed an exploration alliance with Rosneft in 1998, with an initial license to search for hydrocarbons in Kaigansky-Vasuykansky area granted in 2002. The following year, BP and Rosneft created the Elvary Neftegaz joint venture before commencing drilling operations in 2004.

Earlier this week, Rosneft Chief Executive Eduard Khudainatov was quoted by Interfax as saying BP had lost interest in Sakhalin.

The end of the joint venture marks a further Russian retreat for BP. In January, Rosneft agreed with BP to a $16-billion share swap and development of three Arctic offshore licenses, but that deal was blocked by BP’s partners in the TNK-BP Ltd. joint venture. Rosneft later announced a global partnership with Exxon Mobil Corp.

BP said Friday it will work with Rosneft to find the best way to accomplish its exit from Sakhalin. In his remarks to Interfax, Mr. Khudainatov said Rosneft remained “very interested” in the project but wouldn’t offer participation to anyone else following BP’s departure.

SOURCE ARTICLE

By Stephen Bierman – Dec 7, 2011 12:15 PM GMT

Royal Dutch Shell Plc. (RDSA) said its Sakhalin venture with OAO Gazprom, Russia’s natural gas export monopoly needs to expand fast to sell liquefied natural gas to Asia at maximum profit.

There’s a window of opportunity in the Asia Pacific from 2015 to 2020, Harry Brekelmans, the head of the energy company’s Russian unit, told reporters today in Moscow. The market will tighten after that with additional LNG volumes coming from Australia, Shell spokesman Maxim Shoob said today.

Shell, Gazprom and Japanese partners Mitsui & Co. and Mitsubishi Corp. are considering investing in a third processing train to the Sakhalin-2 LNG plant to add capacity. Demand for LNG has soared in Japan, South Korea and other Asian markets after an earthquake and tsunami led to the Fukushima nuclear disaster and boosted Japan’s need for other fuels.

The Sakhalin project is in a position to capture this demand window, Brekelmans said.

The group will have to resolve how to supply natural gas for any additional train it seeks to build. Gazprom may seek an asset swap with a foreign partner in the project before committing further reserves off the Pacific coast of Sakhalin Island for the expansion of the LNG plant, Gazprom’s Deputy Chief Executive officer Alexander Medvedev said on Sept. 27.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

SOURCE ARTICLE

Postponing seismic work may help the whales recover, say scientists

BBC NEWS

Oil exploration plans in eastern Russia are a serious threat to gray whales in the area, say scientists with the International Whaling Commission (IWC).

The Rosneft company is due to begin a seismic survey around Sakhalin island within the next few weeks.

The IWC’s Scientific Committee is “extremely concerned” about the plans and is calling for a postponement.

The gray whale population is critically endangered, with only about 130 animals left and only 20 breeding females.

Russia says it is aware of the problem, but the company’s capacity to shift is limited for financial reasons.

Western Pacific gray whales (also known as grey whales) come to Sakhalin each summer to feed, and seismic survey work – which involves producing high-intensity sound pulses and studying reflections from rock strata under the sea floor – can seriously disrupt their feeding.

The small area where the whales congregate has shallow water, and scientists suspect this is where mothers teach their calves how to feed at the sea floor.

The IWC’s head of science, Greg Donovan, said the survey work was planned for the period “when there’s probably the highest density of gray whales and particularly mother-calf pairs.

“The Scientific Committee is requesting them to postpone the survey until next year, and to do it as early in the season as possible when there are as few whales there as possible,” he told BBC News.

“We actually made a similar recommendation to another company, Sakhalin Energy; they have followed that recommendation and this year, they are carrying out the survey with a very detailed mitigation plan as early in the season as possible.”

The mitigation plan includes a provision that testing must stop if mother-and-calf pairs appear in the area.

Energy balance

Russia’s IWC commissioner, Valentin Ilyashenko, said he accepted the scientists’ conclusions, but there might be a problem in following through on its recommendations.

“Our government and minister of natural resources know this problem… and this question was discussed maybe one month ago,” he said.

“From my information, it’s very difficult to start this work next year, because the work was planned last year and the money was in the budget for this year, and all equipment and the mothership is rented.

“It’s very difficult to change that work but in any case, I know that our scientists and the staff of our ministers is working with this problem with this company.”

The International Union for the Conservation of Nature (IUCN) has been working with companies including Sakhalin Energy to minimise the impact on gray whales.

But Rosneft, reportedly, has appeared less interested in the issue.

Justin Cooke, a member of the IUCN panel, said that if the planned tests go ahead, there was a risk that mothers with calves could be driven out of their feeding grounds.

“This could have a crucial impact on this critically endangered population,” he said.

“We have some evidence of a slow recovery, but that would be jeopardised by serious disruption in their feeding grounds.”

The population has to recover and expand, he said, if its survival is to be assured.

Going south

The western grays spend the winters in breeding grounds further south, where another issue threatening their survival is entrapment in fishing nets.

Japan is trying to reduce this bycatch in its fleet through an education programme.

Fishermen are not now allowed to sell gray whale meat, and are asked to report entanglements so that authorities can release the whales.

Since the programme’s introduction in 2008, there have been no reports of gray whales deaths through this mechanism.

This is one component of a comprehensive conservation plan drawn up by scientists from a number of countries and endorsed here by the IWC.

A key priority is to locate the breeding grounds, which are thought to be close to the Chinese coast – perhaps in a military zone.

In a surprise move, Russian prime minister Vladimir Putin invited Royal Dutch Shell to help develop two new oil and gas fields on Sakhalin Island, just three years after the government forced the company to cede majority control in the Sakhalin 2 project to state-controlled group Gazprom.

June 27 (Bloomberg) — Russia is prepared to cooperate with Royal Dutch Shell Plc, Europe’s largest oil producer, on oil and gas projects in the Russian Far East known as Sakhalin-3 and Sakhalin-4, Russian Prime Minister Vladimir Putin said.

During a meeting of the Western Gray Whale Advisory Panel (WGWAP), Sakhalin Energy – a partnership between Shell, Gasprom and other shareholders – agreed to cancel its proposed 2009 seismic activities, despite having already put plans in place for the work.

“On the one hand, we have Shell and Gazprom at least looking at their plans to see if impacts on whales can be reduced and on the other hand we have BP, Exxon and Rosneft not even telling scientists what their plans are.”

The Times

Need to know

Natural Resources

BP: The oil and gas group will hold its annual meeting on Thursday, when Peter Sutherland, the chairman, will face calls for his departure because of his involvement as a non-executive director of the troubled Royal Bank of Scotland.

Gazprom: The Russian gas group has named Royal Dutch Shell, the Anglo-Dutch oil and gas company, as a top “potential partner” in its new upstream Sakhalin-3 project in Russia’s Far East.

Oil and Gas UK: The leading lobby group for the North Sea oil and gas industry has called on the Chancellor to introduce tax concessions for its members or risk the loss of about 50,000 jobs and a sharp decline in investment in offshore exploration.

FULL ARTICLE

The dispute ended in victory for the Russian side. Shell and its partners in Sakhalin Energy sold their controlling interest in the venture to the Russian state-owned energy company Gazprom, and are now minority shareholders.