Russian Content of Sakhalin-1 Project Tops US$2 Billion
Moscow, Russia - June 17, 2003 -- Exxon Neftegas Limited (ENL), operator for the Sakhalin-1 Consortium, announced today that the value of contracts awarded to Russian companies for the Sakhalin-1 Project has exceeded US$2 billion.Speaking at a press conference in Moscow this afternoon, Mr. Neil Duffin, ENL's Chairman, also announced that two major ship charter contracts for Sakhalin-1 Project were recently awarded to Primorsk Shipping Corporation (PRISCO) and Sovcomflot.
PRISCO and Sovcomflot will operate five Aframax-class ice-strengthened double-hulled tankers to export Sakhalin-1 crude oil from the DeKastri terminal in the Russian Far East to Japan, Korea and other far-eastern markets. Depending on the production profile of the Sakhalin-1 fields, the value of the contracts will range between US$400-600 million.
"From its inception, the Sakhalin-1 Project implemented a comprehensive Russian content strategy to identify qualified Russian companies and organizations," said Mr. Duffin. "We are proud that the project is bringing significant benefits to Russian industry."
These ship charter contracts are the latest in a series of major contracts awarded to Russian companies by the Sakhalin-1 Project. Other contracts have included the refurbishment of the Orlan platform, the construction of pipelines and infrastructure, and the provision of air services. ENL, the Sakhalin Oblast Administration and the Ministry of Economic Development and Trade of the Russian Federation have established a Joint Committee on Russian Content to assist with project involvement of Russian subcontractors and suppliers of goods and services.
Other key features of the Sakhalin-1 Consortium local content strategy include the launch of the Sakhalin-1 website to communicate project information to Russian contractors and suppliers; holding project seminars in Moscow, Khabarovsk and Yuzhno-Sakhalinsk; encouraging active involvement of Russian design institutes in the project design; and tailoring major contract packages to encourage Russian participation. ENL maintains a comprehensive Vendor Database that includes approximately 3,500 companies and its Vendor Registration system allows potential vendors to register online.
Development of the Sakhalin-1 Project will provide many employment opportunities for Russian citizens. Other benefits to Russia include direct revenues, estimated at US$40 billion, and improvement of local infrastructure. In addition, Phase 1 development will make gas supplies available for purchase by customers in the Russian Far East.
The Sakhalin-1 Project, the largest greenfield foreign direct investment project in Russia, includes the Chayvo, Odoptu and Arkutun Dagi fields. It has potential recoverable resources of approximately 2.3 billion barrels (307 million tons) of oil and 17 trillion cubic feet (485 billion cubic meters) of gas. Capital investment on full field development is estimated at more than US$12 billion. To date, in excess of US$ 1.6 billion has been spent on Project activities.
In addition to ENL (30% interest, operator), Sakhalin-1 Consortium investors are the Japanese company Sakhalin Oil and Gas Development Co., Ltd. (30%), Indian company ONGC Videsh Ltd. (20%) and two Russian companies, Sakhalinmorneftegas-Shelf (11.5%) and RN-Astra (8.5%).
For more information on the Sakhalin-1 Project, please contact Glenn Waller (Moscow 095 564-8950) or Michael Allen (Yuzhno-Sakhalinsk 4242 46 88 12) or logon to the Sakhalin-1 website (www.sakhalin1.ru)