The Moscow Times: Sakhalin-1 Faces Delay Until ’07

(Sergei Karpukhin/Reuters: A vessel leaving an oil platform at Sakhalin-1’s Chaivo field on Tuesday.)

Thursday, October 12, 2006. Issue 3517. Page 5.
By Dmitry Zhdannikov
Reuters  

NOGLIKI, Yuzhno-Sakhalinsk — Federal authorities are still checking a new oil terminal built by the ExxonMobil-led Sakhalin-1 group and it may take two months before full operations are allowed, project members said Wednesday.

They also said full-scale oil production of 250,000 barrels per day could be delayed to the first quarter of 2007, from the end of this year, as the facilities needed more work.

“The terminal is currently working under a testing regime. This may continue for another month or two,” said Michael Allen, head of government and public relations for the group.

The De Kastri terminal had been expected to obtain the necessary permissions in September or October, but the Federal Service for Ecological, Technological and Atomic Inspection delayed the approval as it said the newly built facility should undergo more checks.

It is now allowed to export only trial cargoes, which are loading very slowly although the group has already pre-sold five tankers to Asian customers. The terminal, in the Khabarovsk region, is linked to the offshore production facilities of Sakhalin-1 via a 210-kilometer pipeline.

The delay is widely seen as part of rising pressure on the country’s production sharing agreements, including Sakhalin-1 and Shell-led Sakhalin-2, as the Kremlin aims to limit foreign involvement in strategic energy assets.
 
Both Sakhalin projects have been told they would not be allowed to increase costs. Shell has been accused of ecological damage and Exxon faces trouble in allowing exports to China.

“The inspectors are currently working at the terminal and we are working through a number of issues with them. A lot of things have to be tested. But there are no ecological questions whatsoever,” Allen said.

Lev Brodsky of Rosneft, Exxon’s partner in Sakhalin-1 along with Japanese consortium Sodeco and India’s ONGC, said he expected De Kastri to become a state-registered export outlet in December. The ecology watchdog has said it may grant all the permissions by mid-November.

“We are currently not talking about a large number of cargoes. We are not in a rush. What we want is a safe start of operations,” said Brodsky, the head of Rosneft subsidiary Sakhalin Projects.

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