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MarketWatch: Oil output from Sakhalin-2 suspended for rest of year after severe weather

By Benoit Faucon
Last Update: 12:06 PM ET Nov 25, 2007

LONDON (MarketWatch) — Oil production at the OAO Gazprom led Sakhalin-2 project was suspended last week for the rest of the year after severe weather conditions damaged a buoy, the Gazprom venture operating the project said Sunday.

The project normally produces 80,000 barrels a day of oil, but the production has been interrupted earlier than expected, said a spokesman for the venture, Sakhalin Energy Investment Co. Ltd.

In a statement on its Web site, Sakhalin Energy said that oil production was suspended due to severe weather conditions at the Vityaz complex.

“The Single Anchor Leg Mooring (SALM) buoy at the Vityaz complex has suffered damage,” which “resulted in a small release of oil into sea,” it added.

Only the project’s oil production was affected. The natural gas and liquefied natural gas components of the project, which haven’t yet begun production, were unaffected by the incident.

Gazprom has managed the Sakhalin-2 oil and gas project on the far eastern Russian island of Sakhalin since April this year after Royal Dutch Shell PLC (RDSB.LN) agreed to relinquish control.

Oil production at the project is normally possible until mid-December, before icing typically shuts it in until springtime. But a Sakhalin Energy spokesman said oil production can sometimes be shut in by the very end of November in the worst winters.

Last year, the project’s oil production ended the year on Dec. 17.

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