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After Sakhalin-2 Russia to Take Sakhalin-1 Project Under Its Control

July 7, 2022

(Photo: Sakhalin -1)
(Photo: Sakhalin -1)

Pavel Zavalny, the head of the energy committee in Russia's lower house of parliament, said on Thursday that the Sakhalin-1 oil and gas project in the country's far east, will be put under Moscow's jurisdiction, just like neighboring Sakhalin-2.

President Vladimir Putin signed last week a decree that seizes full control of the Sakhalin-2 gas and oil project, a move that could force out Shell and Japanese investors.



Four companies - Rosneft, ExxonMobil, Japan's SODECO, and India's ONGC Videsh - are partners in the Sakhalin-1 group of fields. ExxonMobil had decided to pull out from the project in March after Moscow launched what it calls a "special military operation" in Ukraine.

"We were forced to make a decision to move Sakhalin 2 from the (production sharing agreement) regime to Russia's jurisdiction amid sanctions... Obviously, the same will happen to Sakhalin 1," Zavalny told an online briefing.

The West has introduced sweeping sanctions against Russia after it sent its troops into Ukraine on Feb. 24.

"When sanctions are being introduced, when the companies are effectively unable to take an active part in a project, this creates various risks for us and we are forced to make such decisions," Zavalny said.

Earlier on Thursday, Russian Deputy Prime Minister Yury Trutnev said that oil output at Sakhalin 1 had plummeted to just 10,000 barrels per day (bpd) from 220,000 bpd due to "restrictions".

(Reporting by Reuters; editing by Carmel Crimmins)



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