Monday, October 03, 2005

Sakhalin

Stratfor alerts us to a little-known but significant event that occurred over the weekend:

Oil and gas production has begun in the Sakhalin-1 fields in the Russian Pacific. In the past, there have been myriad statements -- both verbal and written -- on this issue, which involves one of the most lucrative energy-producing areas of Russia and the world. On Oct. 1, for the first time, we saw action. Oil and gas are being extracted and will go to market.

Initially, the energy supplies will go to the Russian market. A pipeline set for completion by year-end will carry oil to the Komsomolsk-on-Amur refinery in the Russian Far East, while natural gas will be pumped to the Khabarovsk region along the Chinese border. But beginning next year, energy from the Sakhalin fields will be shipped to foreign customers as well. The international consortium that has developed the fields -- including operator Exxon Neftegas Ltd., which holds a 30 percent stake; Japan's Sodeco (30 percent), India's ONGC Videsh Ltd. (20 percent) and Russian firms (20 percent) -- has already hired several ice-resistant tankers on a long-term charter to deliver hydrocarbons to customers on both the Asian and American sides of the Pacific.

4 comments:

Jaffna said...

Primary Red

Positive development in Sakhalin. It confirms our point that foreign policy, international trade and defence are being effectively coordinated at one level in New Delhi.

libertarian said...

Must be an engineering feat. Heard the oil needs to be raised from well over a mile deep through permafrost. Great to hear that ONGC is making significant moves.

Anonymous said...

there are a lot of environmental concerns about ferrying oil around that region - especially around lake baikal - which is home to endangered flora and fauna. As long as India benefits, its great. Does anybody know if the oil will reach India ?

Primary Red said...

We suspect not.

However, oil being fungible, it is hardly necessary for that specific oil cargo to get to India -- as long as we get the hard currency to secure needed oil elsewhere.

Best regards.

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