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Lloyds List: Construction problems set to postpone Sakhalin oil

Martyn Wingrove, Lloyds List
Published: Sep 27, 2007

OIL and gas exports from the new terminals on Sakhalin Island will not begin until well into the first half of next year due to construction and commissioning delays on Russia’s largest offshore project.

The Gazprom-led Sakhalin Energy Investment company continues to build and commission the oil and gas pipelines that run along the length of the east Russian island, but construction has been more complex than anticipated.

The consortium, which includes Shell, Mitsui and Mitsubishi, has installed two new platforms and built two export terminals and offshore pipelines as part of the Sakhalin II project.

Sakhalin Energy said oil exports from the new terminal in Aniva Bay will not begin until next year and exports from a new liquefied natural gas plant will follow in the fourth quarter of 2008.

‘We continue to make good progress on key milestones. This year we have installed the PA-B platform, completed the offshore pipelines and imported our first LNG cargo for commissioning the plant,’ said a Sakhalin Energy spokeswoman.

‘It is not possible to be precise as to when the start-up of full production will happen. It depends on completion and testing of the facilities.

‘We will start year-round oil shipments in the first half of 2008 and produce LNG in late second half 2008,’ she said.

Sakhalin Energy expects to import a second LNG cargo in October to help with the commissioning work at the Prigorodnoye LNG plant.

In July, Golar’s 2006-built LNG carrier Granosa delivered a 135,000 cu m cargo to the new jetty, enabling this to be commissioned. The spokeswoman said the offshore platforms, pipelines and the oil terminal are commissioned and ready, while drilling has started on the new Lunskoya A platform and should begin soon on the PA-B platform, which will be the main source of oil for export.

This leaves the 1,600 km of pipelines, and the land oil and gas processing facility to be completed, tested and commissioned. Construction of the pipelines has been delayed by the complex terrain on the line route and intervention last year by the authorities to halt building work.

‘Our onshore pipelines are approaching the final stages of construction and the onshore processing facility is also taking shape. With over 1,000 streams and rivers to traverse, river crossings have been a huge effort,’ said Ian Craig, chief executive of Sakhalin Energy.

‘We will import a second cargo from Alaska later this year to top up the LNG in storage and to continue this commissioning and testing process through to early 2008.’

Mr Craig said his company and Russian shipping group Sovcomflot are in the final stages of establishing a joint venture to operate the port of Prigorodnoye. They are training Russian LNG carrier and tanker pilots at other ports around the world.

The Prigorodnoye port will handle 160 LNG carriers and 100 aframax tankers each year, or around one ship per day.

Mr Craig also said two new LNG carriers, under construction at Mitsubishi’s shipyard in Nagasaki, will be named within a month.

‘The carriers, to be named Grand Aniva and Grand Elena, are being built for a Russian-Japanese consortium with the participation of Sovcomflot.

A third carrier, the Grand Mereya, will be operated by a consortium which includes Primorsk Shipping Corp’ Mr Craig said.

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