RIA Novosti: Russia’s environmental watchdog will inspect the Sakhalin-1 oil and gas project in Russia’s Far

ST. PETERSBURG, February 14 (RIA Novosti) – Russia’s environmental watchdog will inspect the Sakhalin-1 oil and gas project in Russia’s Far East this spring to check on its compliance with its licensing agreements, an agency official said Wednesday.

The project, which is operated under a production-sharing agreement (PSA) by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, is located on Sakhalin Island’s northeastern shelf and is expected to bring in around $52.2 billion to the Russian budget by 2054, when it is scheduled to end.

“It will be an ecological inspection,” said Oleg Mitvol, deputy head of the Federal Service for the Oversight of Natural Resources.

“I think it [the inspection] will take place in April-May, following the spring thaw,” he said, adding that it could last for about a month.

Russia’s environmental watchdog said last December it will begin an inspection of Sakhalin-1in January 2007, raising concerns that it too will face the problems its Shell-led sister-project, Sakhalin II, has been facing since September 2006.

The multibillion-dollar Sakhalin II, whose operator is controlled by Royal Dutch Shell, has been accused of inflicting heavy environmental damage on Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

The Sakhalin-1 operator has already been blasted last year by the Russian financial regulator, the Audit Chamber, for serious violations of its production-sharing agreement (PSA) and Russia’s Land Code.

“An inspection revealed that the work plan and expenditure schedules under the Sakhalin-1 project between 1997 and 2005 have not been fulfilled, except in 2000 and 2005,” the Audit Chamber said at the time.

Apart from the U.S. company, which owns 30%, the Sakhalin-1 international consortium comprises Russia’s state-owned Rosneft (20%), India’s ONGC (20%), and Japan’s SODECO (30%).

The consortium is developing the Arkutun-Dagi, Odoptu, and Chaivo deposits, with recoverable reserves estimated at 2.3 billion barrels of oil and 485 billion cubic meters (17.1 trillion cubic feet) of natural gas.

The deposits are so far yielding 60,000 barrels per day, but output will be increased to 250,000 barrels in January 2007 after the commissioning of new onshore facilities. Output in 2007 will be 11.5-12 million metric tons (about 8.8 million barrels).

Sakhalin-1 is expected to produce about 258 million

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