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Bloomberg: Gazprom, Shell Delay Drilling Russia’s First Offshore Gas Well

By Torrey Clark

Oct. 24 (Bloomberg) — OAO Gazprom’s Sakhalin-2 project with Royal Dutch Shell Plc delayed drilling Russia’s first offshore natural-gas well until next year as the venture completes construction of overland oil and gas pipelines.

Project operator Sakhalin Energy Investment Co. plans to drill as many as five gas production wells from the Lunskoye-A platform next year, spokeswoman Evgenia Oleinikova said by telephone today from Yuzhno-Sakhalinsk in Russia’s Far East.

The venture last month delayed winter crude oil exports “closer to the start of the second quarter” of 2008 while onshore oil and gas pipelines to ice-free export terminals in the south are completed.

“We’re working based on our target of starting exports of liquefied natural gas in the second half of next year,” Moscow- based spokesman Ivan Chernyakhovsky said today. Neither Oleinikova nor Chernyakhovsky commented on the drilling delay.

Russia, the world’s biggest gas supplier, has lagged behind competitors Indonesia and Qatar in liquefying natural gas for shipment by tanker to consumers such as Japan and North America. Sakhalin Energy is building the country’s first LNG plant.

Russian regulators last year threatened to halt construction of the twin oil and gas pipelines because of environmental concerns. At the time, state-run Gazprom was negotiating to buy control of the $22 billion Sakhalin-2 project from Shell and its partners, Mitsui & Co. and Mitsubishi Corp.

Sakhalin Energy said July 9 that it had begun work on a well into which drilling waste would be injected and planned to start the first production well from the Lunskoye-A platform this year.

To contact the reporter on this story: Torrey Clark in Moscow at [email protected] .

Last Updated: October 24, 2007 08:01 EDT

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