Russia is not to get profit from the Sakhalin-2 project before 2013
The Russian government is expected to start getting profit from the Sakhalin-2 project only in 2013-2014 at the earliest, Deputy Industry and Energy Minister Andrei Dementyev said at extra meeting of the Federation Council - Russian parliament's upper house, Rosbalt reports. According to Dementyev, Sakhalin Energy's costs have totaled U.S. $10.7 billion since the launch of the Sakhalin-2 project. He also said he believed there were no reasons to shut down the project yet, and that Russia would have to compensate Sakhalin Energy for all losses it would incur should the project be shut down, except for fines.
The Sakhalin II project comprises an oil field with associated gas, a natural gas field with associated condensate production, a pipeline, a liquefied natural gas plant with design capacity of 9.6 million tons per year and an LNG export terminal. Russia signed the Sakhalin II production sharing agreement in 1994 with Sakhalin Energy, an investment company controlled by oil major Royal Dutch Shell. The Sakhalin-2 project area is located near Sakhalin Island and has oil reserves of 150 million tonnes and gas reserves of 500 billion cubic meters. The project is estimated to be costing $20 billion while Russia’s operating revenues to be over $50 billion considering oil price at the estimated level of $34 per barrel.
