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Bloomberg: Exxon Loads First Sakhalin Oil as Shell Faces Export Delays

By Lucian Kim

Oct. 6 (Bloomberg) — Exxon Mobil Corp. said it has begun loading its first oil from Russia’s Sakhalin Island, even as the government threatens to delay the export schedule at a neighboring project run by Royal Dutch Shell Plc.

The newly-inaugurated De Kastri oil terminal on Russia’s Pacific Coast began loading the Viktor Titov, a tanker owned by Primorsk Shipping Corp., on Oct. 1, said Michael Allen, a spokesman for the Exxon-led Sakhalin-1 project.

“This is a testing and commissioning process,” Allen said by phone from Yuzhno-Sakhalinsk, seven time-zones east of Moscow. The terminal’s capacity of 250,000 barrels a day will be reached early next year, he said.

Sakhalin-1, run by Exxon in partnership with Russian state- run oil company OAO Rosneft, is helping turn Russia into an alternative source of energy for east Asia. Meanwhile, Shell’s Sakhalin-2 project, which has no Russian partners, is facing increased government pressure in the form of environmental checks.

While Sakhalin-1 faces similar inspections, Allen said they were nothing out of the ordinary.

A check at De Kastri by Rostekhnadzor, the industrial safety inspectorate, was continuing, Allen said. “We both have the common goal of seeing this terminal up and running as soon as possible,” he said.

More Tankers

A check due from Rosprirodnadzor, the environmental inspectorate that is seeking to stop construction at Sakhalin-2, is also not causing alarm. Allen said Sakhalin-1 has already had about 40 inspections this year by various government agencies.

Sakhalin-1’s De Kastri terminal will probably load three more tankers in November, Rosneft Chief Financial Officer Peter O’Brien said in a conference call earlier this week. When it reaches capacity, the port will load one tanker every three to four days, Allen said.

Shell has contracts to sell liquefied natural gas from Sakhalin-2 to Japan, Korea and Mexico in 2008. Any delay in construction could jeopardize timely delivery.

Shell Chief Executive Officer Jeroen van der Veer said yesterday that it would be “logical” to give state-run gas monopoly OAO Gazprom a stake in the project. Talks on an asset swap were suspended last year after Sakhalin Energy, the project operator, doubled the costs of Sakhalin-2’s second phase to $20 billion.

To contact the reporter on this story: Lucian Kim in Moscow at [email protected] 

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