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Sakhalin-1 Oil, Gas Production Less Than Half of Plan in 2022

February 27, 2023

File image: Sakhalin - 1
File image: Sakhalin - 1

Valery Limarenko, the governor of Russia's far eastern Sakhalin island, told President Vladimir Putin on Monday that oil and gas production at the Sakhalin-1 project was less than half of that planned in 2022. 

The project saw a sharp decline in output following the departure of U.S. oil and gas major ExxonMobil XOM.N after Moscow sent tens of thousands of troops into Ukraine on Feb. 24 last year. 

"First, in May, oil production was practically stopped, and in September, it was gas production. We lost a large amount, more than half, of the annual plan," Limarenko said at a televised meeting with Putin. 

Russia is trying to recover losses from the Exxon withdrawal and the local General Prosecutor's Office has been asking a court to recover 15.5 billion roubles ($220 million) in allegedly unpaid taxes from the company.

"Given that two-thirds of the (regional) budget consists of oil and gas taxes, we will lose about 50 (billion roubles, $663.6 million), 49 billion, according to our calculations. We will somehow get out, but this problem really exists," Limarenko told Putin. 

He had said in September that oil production of 4.2 million tonnes (84,000 barrels per day) was expected at the Sakhalin-1 project, down from a planned 8.9 million tonnes. An industry source told Reuters last month that Russia restored oil output at Sakhalin-1. 

Exxon took an impairment charge of $4.6 billion on its Russian activities in April. It also reduced local energy production and moved staff out of the country. 

Russia last year approved requests by India's ONGC Videsh, the overseas investment arm of state-run Oil and Natural Gas Corp , and Sakhalin Oil and Gas Development Co (SODECO), a consortium of Japanese firms, to retain their respective 20% and 30% stakes in the Sakhalin project. ($1 = 75.3500 roubles) 

(Reuters - Reporting by Vladimir Soldatkin / Editing by Gareth Jones and Louise Heavens)




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