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RIA Novosti: Sakhalin I PSA gives Russia 15% share or less – Audit Chamber

19:40 | 06/ 10/ 2006 

MOSCOW, October 6 (RIA Novosti) – Russia can receive no more than 15% of hydrocarbon output in the Sakhalin I energy project given the way the project has been implemented since 1997, Russia’s financial watchdog said Friday.

U.S. oil major Exxon Neftegas Limited operates the project under a production-sharing agreement (PSA). Apart from the American giant, the Sakhalin-I international consortium comprises Russia’s state-controlled Rosneft (20%), India’s ONGC (20%), and Japan’s Sodeco (30%).

“An inspection showed that the work plan and expenditure schedules under the Sakhalin I project during 1997-2005 have not been fulfilled, except in 2000 and 2005,” the Audit Chamber said.

The watchdog said the project operator had failed to meet its obligations to start oil production in 2003 and gas production in 2006. The project area is comprised of the Chayvo, Odoptu and Arkutun-Dagi deposits. The recoverable reserves of the deposits are estimated at 2.3 billion barrels of oil and 484 billion cu m (17.1 trillion cubic feet) of natural gas.

“The absence of contracts on exports of natural gas could delay the development of the Chayvo deposit until 2012,” the Audit Chamber said in a statement.

The statement also said the project operator had conducted prospecting work with serious violations of the production sharing agreement and Russia’s Land Code.

The Audit Chamber decided to notify both the Russian government and Exxon Neftegas about the results of the probe and include them in the expert conclusion on the government report covering the implementation of PSAs in Russia.

Total investment in the Russian oil sector’s production sharing agreement projects Sakhalin-1, Sakhalin-2, and Kharyaga hit $16 billion in 2005, a senior Energy Ministry official said last year.

Sakhalin-1 and Sakhalin-2 oil and natural gas projects, led by ExxonMobil and Royal Dutch Shell, and the Kharyaga oil project in Siberia, led by France’s Total were launched in 1996. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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