Sakhalin-I drilling set to resume

The Russian Natural Resources Ministry has approved a request for permission to resume drilling work at the Sakhalin-I project. The Sakhalin I consortium plans to begin drilling a new appraisal well, Chaivo-6, in July, ministry officials said.


MOSCOW�The Russian Natural Resources Ministry has approved a request for permission to resume drilling work at the Sakhalin-I project. The Sakhalin I consortium plans to begin drilling a new appraisal well, Chaivo-6, in July, ministry officials said.

The group, led by Exxon Neftegaz Ltd., is developing Arkutun-Daginskoye, Chaivo, and Odoptu fields, estimated to hold 2 billion bbl of oil, 240 million bbl of condensate, and almost 15 tcf of natural gas. Development of the fields may require more than $13 billion over the 42-year expected life of the project. The Sakhalin I group plans to spend about $53 million this year.

The ministry is requiring the consortium to inject all of its drilling mud into the well rather than dispose of wastes at sea. The group has indicated that it will comply.

The Sakhalin I consortium had to halt appraisal drilling last year, reportedly as a result of concerns about drilling waste disposal and other environmental issues. The partners have said, however, that time had simply run out on their drilling permit, which Russia has now renewed.

Exxon and Japan's SODECO each hold a 30% stake in the project; Russian state firm Rosneft holds 17%, and Rosneft's Sakhalinmorneftegaz subsidiary owns 23%. The Russian companies have said they may sell part of their stakes to pay off Rosneft's debt to the consortium.

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