Exxon announces its exit from the Sakhalin-1 project, continuing the big oil exodus from Russia
Exxon Mobil, the world’s largest oil company, stated on Tuesday that it would abandon Russia’s oil and gas businesses, worth more than $4 billion, and suspend new investment as a result of Moscow’s invasion of Ukraine.
ExxonMobil’s subsidiary Exxon Neftegas Limited owns a 30% stake in the Sakhalin-1 project. It is the main project manager.
The Sakhalin-1 project Production Sharing Agreement was signed in 1995 by ExxonMobil, SODECO, Rosneft, and Sakhalinmorneftegas-Shelf. In 2001, ONGC Videsh became a member of the consortium.
Exxon Mobil, the world’s largest oil company, stated on Tuesday that it would abandon Russia’s oil and gas businesses, worth more than $4 billion, and suspend new investment as a result of Moscow’s invasion of Ukraine.
“ExxonMobil stands with the people of Ukraine as they fight for their freedom and the future of their country. “We condemn Russia’s military action, which jeopardises Ukraine’s territorial integrity and puts its people in danger,” the business stated in a statement.
The corporation went on to say that it had “an obligation to ensure people’s safety, environmental protection, and operational integrity.”
“Our responsibility as an operator entails more than just a financial investment. The process of ceasing operations will need to be carefully controlled and closely coordinated with co-venturers to ensure that it is carried out securely, according to the statement.
The corporation announced that it is beginning the process of ceasing operations and exiting the Sakhalin-1 project.
ExxonMobil’s subsidiary Exxon Neftegas Limited owns a 30% stake in the Sakhalin-1 project. It is the main project manager.
The group that owns Sakhalin-1 comprises members from three additional countries:
RN-Astra (8.5 percent) and Sakhalinmorneftegaz-Shelf (8.5 percent) are two Rosneft affiliates (11.5 percent )
SODECO Consortium of Japan (30 percent )
India’s Oil and Natural Gas Corporation, ONGC Videsh Limited (20 percent )
The Sakhalin-1 project Production Sharing Agreement was signed in 1995 by ExxonMobil, SODECO, Rosneft, and Sakhalinmorneftegas-Shelf. Videsh joined ONGC in 2001.
In the Okhotsk Sea, the project runs three fields: Chayvo, Odoptu, and Arkutun-Dagi. It is located in the Russian Far East, off the northeastern shore of Sakhalin Island.
The project has estimated oil reserves of 2.3 billion barrels (307 million tonnes) and natural gas reserves of 17.1 trillion cubic feet (485 billion cubic meters). Since the project began, around 885.3 million barrels (118.2 million tonnes) of oil and condensate have been exported. Natural gas delivered to Russian Far East clients in the amount of 939 billion cubic feet (about 27 billion cubic metres).
The massive land-based Yastreb rig drilled the first Sakhalin-1 producing wells at the offshore Chayvo field in 2003, and early oil production began in 2005. The Odoptu field began production in 2010, and the Berkut platform in the Arkutun-Dagi field began production five years later, in 2015. All of the Sakhalin-1 licencing blocks are now producing.
The project is expected to cost $10–12 billion in total, making it the largest foreign direct investment in Russia.
Shortly after the project began, in 2007, it reached its targeted peak output rate of 34 thousand tonnes per day.
Sakhalin-1 also holds the world record for long-reach wells, with nine of the top ten longest wells drilled here, including the Chayvo field’s longest O-5 well (15 thousand metres). The project employs four of the world’s most powerful drilling rigs.
