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Main page > Comments > Fuel & Energy > Struggle for Sakhalin 1
Struggle for Sakhalin 1
Russian authorities have again sent a warning on possible replacement of the Sakhalin 1 project operator, which is currently Exxon Neftegas. Audit Chamber auditor Mikhail Beskhmelnitsyn was quoted as saying that the operator had substantial growth in expenses: from the planned $48.2bn to $95.3bn. At the same time, the 2009 oil production dropped by 2.2m tons and the gas output declined by 1.4bn cu m. From the point of view of state auditors, there were some irrational expenses on trips of the company's managers and overrated salaries of foreign specialists. As a result, the state profits from this project dropped by 2.2 times in the form of a share in profitable products. The auditor publicly declared he did not rule out replacement of the project operator stressing "there are no irreplaceable" [operators]. Nevertheless, substituting Exxon with a Russian firm does not seem to be a probable scenario yet. Inviting nonresidents to complicated deposits was not accidental. Although current possibilities of Russian companies are considerably higher than in the 1990s, there are still many questions on the financial potential of domestic state players and on their possession of technologies sufficient to develop complicated deposits as well as on their real desire to invest in risk projects without guaranteed and quite fast commercial gains.
If there is a new operator, two main variants of further developments are possible. If Gazprom becomes the main force in the project, we can expect faster development of the Sakhalin-Khabarovsk-Vladivostok gas pipeline project. If Rosneft wins, implementation of plans on organizing gas exports from Sakhalin 1 to China may accelerate.
By Stanislav Mitrakhovich, NESF leading expert
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