Despite US and the EU sanctions targeting Russia’s big Arctic and Siberia shale oil ambitions, US major Exxon Mobil and Russian state oil company Rosneft have begun producing from the third and final field of theSakhalin-1 offshore project in Russia’s Far East.
The United States and Russia have imposed sanctions on Russia following the Ukrainian conflict.
But Slava Smolyaninov, chief strategist at UralSib Financial Corp in Moscow, toldNew Europeon January 21 that there was no intent for US and EU sanctions to hurt projects like Sakhalin. “Some of the existing fields regardless of who operates them or who owns them will continue producing. The sanctions in the oil and gas industry were about the new fields and some of the cutting-edge technologies on the shelf or in the shale business and those projects are still sort of far, far away,” Smolyaninov said.
The world’s biggest oil platform - Berkut oil rig - is expected to extract 4.5 million tonnes of oil annually. The third field, Arkutun-Dagi, is expected to reach a peak production of 90,000 barrels per day, Exxon Mobil said. The other two fields, Chayvo and Odoptu, commenced production in 2005 and 2010 respectively.
The Sakhalin-1 Consortium was formed in 1996 is the first major shelf project in Russia created under terms of a Product Sharing Agreement (PSA). The international consortium is made up of ExxonMobil (30%), Japan’s Sodeco (30%), Rosneft (20%) and India’s ONGC Videsh (20%). The total cost of the project is estimated to be $10-12 billion, making it the largest direct foreign investment in Russia.
Oil from the Arkutun-Dagi oil field will be processed at the Chaivo onshore treatment facility and then delivered by a pipeline to the DeKastri oil export terminal.
The Berkut rig is designed to work in harsh Arctic conditions, and has an autonomous power supply and can work even when temperatures go down to minus 44 degrees Celsius. Floating ice up to two metres thick cannot damage its substructure. The drilling platform can withstand a 9 magnitude earthquake, and waves up to 18 metres high.
The field, which spreads 60 kilometres offshore holds 72 million tonnes of recoverable oil, is also being developed by another oil rig specially built for the task.
Other Exxon Mobil projects in Russia have been cramped by Western sanctions against Russia. In September, Exxon Mobil said it wouldwind down operations at a Kara Seaventure with Rosneft in response to US sanctions. Rosneft CEO Igor Sechin said at the time that drilling will continue even if sanctions prevent foreign companies from participating in Russia’s Arctic. “Of course we’ll do it on our own and attract the necessary technology and different partners who don’t have limitations on cooperation,” Sechin said.
http://www.neurope.eu/article/despite-sanctions-exxon-rosneft-tap-russian-arctic-field