Gazprom, Shell to expand Sakhalin-2

June 22, 2015

Gazprom and Shell entered into an agreement for the expansion of the Sakhalin-2 LNG project, offshore Russia.

Image from Gazprom.

Sakhalin-2 consists of two offshore oil and gas field developments: Piltun-Astokhskoye and Lunskoye, off the northeastern coast of Sakhalin, later followed by two LNG trains - Russia's first LNG facility with annual capacity of 9.6 million tons of LNG. 

Now the firms are looking to develop a third LNG train, which was subject to a memorandum of understanding, signed in 2014.

The additional gas volumes will be produced by the Sakhalin III project, says Gazprom. Since 2009, when Sakhalin II LNG started up, and as part of Sakhalin III, the company has been exploring further offshore Sakhalin Island, with the Yuzhno-Kirinskoye field discovered in the Kirinsky block, in the Sea of Okhotsk, north-east of Sakhalin Island, in 2010 and Mynginskoye discovered in the same block the following year. First gas was produced from Kirinskoye in 2013, using subsea production - another first for Russia.

Gazprom has said it also plans to carry out 3D surveys and exploration on the Ayashsky and Costochno-Odoptinsky blocks further north as part of Sakhalin III.

However, elsewhere offshore Russia, particularly in Arctic waters, which are thought to contain a significant amount of yet to be discovered reservices, exploration efforts have slowed. This week, Russian energy minister Alexander Novak said Arctic offshore drilling planned for this year will be postponed until 2016 or later. Reuters has previously reported that Rosneft would be forced to postpone drilling a second well in the Kara Sea for at least two more years, as a result of western sanctions over the Ukranian crisis. 

Sakhalin-2 is operated by Sakhalin Energy, which is owned by Gazprom (50%), Shell (27.5%), Mitsui & Co. (12.5%) and Mitsubishi Corp. (10%). The plant produced 10.7 million tons of LNG in 2014.



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