Sakhalin-1 Project Benefits to Russia, the Sakhalin Oblast, and its People October 2008
The Sakhalin-1 Project, operated by Exxon Neftegas Ltd (ENL), is one of the largest international investments in Russia and is an excellent example of the multi-faceted benefits that can be provided by a successfully developed and operated world-class oil & gas project in Russia and Sakhalin Island.
General Benefits:
- Project started on-time and quickly achieved planned production levels of 250,000 barrels/day (33,000 tons/day).
- State-of-the-art technologies and management processes utilized to maximize production, while maintaining the highest levels of safety, environmental, and operational performance.
- Environmental expenditures of over $700M (17.5 billion RUB) protect local wildlife, habitats, and land uses.
- Additional Sakhalin-1 phases (Odoptu; Arkutun-Dagi; Chayvo expansion; Gas Sales) are under development and will further expand project benefits.
- Total estimated reserves of 2.3 billion barrels of oil (307 million tons) & 17.1 trillion cubic feet of natural gas (485 billion cubic meters).
- 157 million barrels (20 million tons) of oil produced to date to meet world energy demands.
- 105 billion cubic feet (3 billion cubic meters) of natural gas delivered to Russian Far East customers.
- Nearly 500 Russian nationals employed directly by ENL.
- Over $5 billion (125 billion RUB) in contracts awarded to Russian companies or joint ventures (67% of the total contracts awarded to third party vendors).
- Numerous Russian and Sakhalin citizens have received advanced international training assignments to enhance skills and capabilities.
- During the life of the project, over $50 billion (1.25 trillion RUB) in taxes, royalty payments, and the state’s share of oil & gas is anticipated to be paid to the Russian state.
- Since project startup, $1.1 billion (28 billion RUB) in royalties and the state’s share of oil & gas has been provided to the Russian Federation; $211 million (5.3 billion RUB) has been provided to the Sakhalin Oblast.
- $100M (2.5 billion RUB) provided to Sakhalin Development Fund; total of $60M (1.5 billion RUB) of production bonuses as all phases developed.
- The Government’s share of revenues has recently increased as the Sakhain-1 project has become “cost current”.
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Over $120 million (3 billion RUB) of Sakhalin infrastructure improvements which benefit local communities, including hospitals & clinics, roads, bridges, harbors, airports, and power & water facilities.
- Examples include: Yuzhno Women’s Clinic; Yuzhno & federal roads; Nogliki airport.
- New ENL office building is an important business addition to Yuzhno-Sakhalinsk.
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$3.5 million (85 million RUB) of charitable contributions provided to local community organizations, including education, health, youth, and arts & civic projects.
- Examples include: Teacher of the Year awards; Yuzhno Children’s Hospital; Sakhalin Chamber Orchestra; summer camp for Okha IPMN children.
- ENL has actively supported local economic development projects with a particular focus on enhancing
- ENL & co-venturers remain responsive to community emergency response needs such as 2007 Nevelsk earthquake.