Sakhalin II

• Overview
• Photos

Events

Strategy

Eastern Siberia and the Far East are top priority regions for Gazprom in the long run.

The state policy on the gas infrastructure development in Eastern Russia is provided for by the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries endorsed by the Russian Government on June 15, 2007 (approved by the Russian Federation Industry and Energy Ministry Order No.340 of September 3, 2007).

Gazprom was appointed as the Program execution coordinator. The Program defines the procedure for the regional gas reserves development aimed at achieving the goals set. Commercial gas production in Eastern Siberia and the Far East is started from the Sakhalin offshore fields that are most prepared for operation (Sakhalin I and Sakhalin II projects).

Project operator

Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) is the Sakhalin II project operator.

The Sakhalin Energy shareholders are listed below:

• Gazprom Sakhalin Holdings B.V. (a subsidiary Gazprom – 50 per cent plus one share);
• Shell Sakhalin Holdings B.V. (a subsidiary of Royal Dutch Shell plc. – 27.5 per cent minus one share);
• Mitsui Sakhalin Holdings B.V. (a subsidiary of Mitsui and Co., Ltd. – 12.5 per cent);
• Diamond Gas Sakhalin B.V. (a subsidiary of Mitsubishi Corporation – 10 per cent).

History

In April 1994 Royal Dutch Shell plc., Mitsui and Co., Ltd. and Mitsubishi Corporation established Sakhalin Energy to develop the Piltun-Astokhskoye and the Lunskoye fields on the northeastern shelf of the Sakhalin Island as part of the Sakhalin II project.

In June 1994 Sakhalin Energy and the Russian party represented by the Russian Federation Government and the Sakhalin Oblast Administration signed Russia’s first Production Sharing Agreement (PSA).

In 1996 Phase 1 was launched.

In 1999 first oil was produced from the Piltun-Astokhskoye oil field.

In 2003 Phase 2 was launched.

In December 2006 Gazprom, Shell, Mitsui and Mitsubishi signed the Protocol on Gazprom’s joining Sakhalin Energy as the main shareholder.

In April 2007 Gazprom and the Sakhalin Energy shareholders signed the Purchase and Sale Agreement. Under the Agreement, Gazprom acquired a 50 per cent plus 1 share in Sakhalin Energy.

In October 2007, AEA Technology International Consultancy published the Sakhalin II project environmental report. The report states that the Health, Safety, Environmental and Social Action Plan (HSESAP) developed by Sakhalin Energy for Sakhalin II project generally meets Russian and international regulatory requirements related to environmental and process safety.

In February 2009 the first Russian liquefied natural gas (LNG) plant was commissioned in Sakhalin.

Fields

The Sakhalin II project stipulates phased development of the Piltun-Astokhskoye and Lunskoye fields located 13–16 kilometers offshore the northeastern coast of the Sakhalin Island.

Reserves

Sakhalin II recoverable hydrocarbon reserves amount to over 600 billion cubic meters of gas and 170 million tons of oil and condensate.

Sakhalin II project uniqueness

• Russia’s first project based on the PSA. The first PSA signed in Russia.
• The first oil and gas producing platforms installed in Russia.
• Russia’s first LNG plant.
• The first sales of Russian gas on the energy markets in Asia-Pacific and North America.

Phase 1

Phase 1 was launched in 1996. It includes oil extraction in Astokhskaya area of the Piltun-Astokhskoye field. Oil extraction is carried out by means of the Vityaz Production Complex comprised of the following elements:

• Piltun-Astokhskoye-A (PA-A)/Molikpaq platform for offshore oil production;
• 2-kilometer submerged pipeline;
• single anchor leg mooring (SALM);
• Okha floating storage and offloading unit.

First oil was produced here in July 1999.

Phase 2

Phase 2 of the Sakhalin II project was launched in 2003. It envisages integrated development of the Piltun-Astokhskoye and Lunskoye fields. Phase 2 envisages:

• further development of the Astokhskoye block for year-round operation at the Piltun-Astokhskoye-A (PA-A) platform;
• commissioning of the Piltun-Astokhskoye-B (PA-B) platform in the Piltun block of the Piltun-Astokhskoye field;
• commissioning of the first Russian offshore gas production platform Lunskoye-A (LUN-A) at the Lunskoye field;
• hydrocarbons treatment at the Onshore Processing Facility (OPF) to be linked with pipelines coming from all three offshore platforms;
• oil and gas transportation from the north to the south of the island through 800-kilometer onshore pipelines;
• LNG production at the first LNG plant in Russia located in the Prigorodnoye settlement, south of the Sakhalin Island;
• LNG and oil offloading to buyers from the LNG jetty and the oil export terminal in the Prigorodnoye settlement, south of the Sakhalin Island.

Sakhalin Energy selected LNG as the best, fastest and most practical option to deliver gas to Asia-Pacific countries. This enables customers to use the existing facilities and at the same time allows Sakhalin Energy to build up sale volumes rapidly across several consumers in different countries.

Sustainability

Sakhalin Energy realizes the role it plays in the development of the Sakhalin Island. Therefore, the concept of promoting sustainable development is the cornerstone of the company’s operating philosophy.

Sakhalin Energy deems it necessary to minimize adverse environmental and social impacts of the project, particularly any impact on vulnerable communities and rare or endangered species. The company seeks to deliver a world-class oil and gas project that will be safe, eco-friendly and of maximum benefit to all the parties involved.

Sakhalin Energy understands its responsibility for social development and nature conservation within the project operations area. Sakhalin Energy is actively working with population, authorities and independent experts to achieve the optimal balance between social, economic and environmental factors that will be beneficial to all the parties involved in the Sakhalin II project: the Russian Federation, its people, Sakhalin II customers and shareholders.

Sakhalin Energy is implementing a multi-million infrastructure upgrade project on the Sakhalin Island repairing and constructing roads, bridges, hospitals, sea ports and airports. The estimated cost of these activities exceeds USD 400 million.