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Reuters: Sakhalin-2 confirms winter crude export delays

Tue Sep 25, 2007 5:37am EDT

MOSCOW, Sept 25 (Reuters) – Russia’s Sakhalin-2 energy group confirmed on Tuesday it would delay year-round exports of crude to 2008 from the end of 2007, but was sticking to its liquefied natural gas deliveries timetable.

The delay will mean lower-than-expected winter supplies of a highly-sought light crude to a tight oil market worried about peak heating season demand and already facing record prices.

“Year-round exports of crude will start in the first half of 2008. As to the LNG deliveries we plan to send the first cargoes in the second half of 2008,” said a spokeswoman for Sakhalin Energy, a consortium developing Sakhalin-2.

Industry sources told Reuters last week exports of Vityaz crude will be pushed back to next year due to delays in pipeline commissioning. Sakhalin Energy then said it was sticking to its schedule to launch the pipeline by the end of this year.

Last year, the project faced intense scrutiny from technical and environmental agencies, and the pressure contributed to a decision by Royal Dutch Shell (RDSa.L: Quote, Profile, Research), then leading the project, to cede control to Russia’s gas monopoly Gazprom.

Shell’s share halved to 27.5 percent after Gazprom (GAZP.MM: Quote, Profile, Research) bought 50 percent stake from Shell and its Japanese partners, Mitsui (8031.T: Quote, Profile, Research) and Mitsubishi (8058.T: Quote, Profile, Research).

Analysts interpreted the sale as yet another step in the Kremlin’s drive to win more control over Russia’s huge energy industry.

Sakhalin-2 produces 60,000-70,000 barrels per day (bpd) of Vityaz crude, with API gravity of 34.3, for only about six months of the year because drifting ice stops production and closes the loading port.

Production is expected to gradually increase from next year and reach 150,000 bpd by 2010-2011.

The project’s 800 km (497 miles) oil and gas pipelines run in parallel down the length of Russia’s remote Sakhalin island off the Pacific coast to a liquefied natural gas (LNG) plant to be commissioned next year. The project’s cost are estimated at $22 billion. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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