Russian contractors reap Sakhalin II rewards
Posted: 2 July 2003
Sakhalin Energy has signed a contract worth over a quarter of a
billion dollars — around $150m million of which will go directly
to Russian industry. The Contract was awarded for the Sakhalin II
Phase 2 Project, Onshore Processing Facility (OPF).
BETS, a joint venture company comprised of Russian company Technostroyexport,
Enka and Bechtel from Turkey and US respectively, was awarded the
$250 million contract for the construction of the Onshore Processing
Facility on Sakhalin Island.
Steve McVeigh, Chief Executive Officer of Sakhalin Energy said:
“We are extremely pleased to have been able to award another
Phase 2 Contract today. This contract emphasises the significant
role that Russian industry is playing in the development of the
world’s latest energy frontier in the Russian Far East, and
in what is probably the largest single integrated oil and gas project
ever undertaken.”
“The OPF contract adds to the growing level of work being
undertaken by Russian industry for the Sakhalin II Project. Russian
industry has already been awarded contracts worth about $2 billion
as part of the Phase 1 and Phase 2 projects. We anticipate that
Russian enterprises will undertake contracts worth about $4.5 billion
during the construction of the Phase 2 project, and then play a
continuing major role in supplying materials and services during
the operational life of Sakhalin II.”
The signing of today’s contract follows Sakhalin Energy’s
May 15, Declaration of Development Date for the Lunskoye Field –
an announcement which marked the official launch of the full Sakhalin
II Project worth approximately $10 billion.
Chairman of Technostroyexport, Victor Velichko, said: “Technostroyexport
is a key member of the BETS joint venture company. We are looking
forward to contributing Russian skills and expertise to enable the
successful construction of this technologically advanced plant,
which will be built in challenging conditions.”
In May, Sakhalin Energy announced its first two sales deals with
Tokyo Gas and Tokyo Electric for a total of 2.3 million tonnes per
annum of LNG from the Sakhalin LNG plant for periods in excess of
20 years. Sakhalin Energy is in discussions with other potential
Customers from Japan and the Asia Pacific Region for the remaining
plant capacity
Following on from the Phase 1 Project, which has been successfully
producing oil from the Vityaz Complex in the Piltun-Astokhskoye
(PA) field offshore Sakhalin Island since July 1999, the Phase 2
Project calls for the installation of a second platform on the PA
field and a new platform on the Lunskoye field.
Offshore pipelines will be installed to bring both oil and gas
ashore to the onshore processing facility before the oil and gas
are transported, via pipelines, to an oil export terminal and LNG
plant at Prigorodnoye in the Island’s south.
The project will involve approximately $300 million worth of vital
improvements to Sakhalin’s infrastructure – including
roads, bridges, railways and Nogliki airport and Kholmsk port. These
upgrades are required to enable the Phase II project to be developed,
and will be funded by Sakhalin Energy. They are already underway,
and will also provide lasting benefits to the people of the island.
Construction activities on the project elements are dependent on
final Government approvals, which are expected to be completed within
the next few months. Subject to the approvals, year round oil production
is expected in 2006. First LNG cargo will be scheduled according
to customer requirements, but is currently planned for 2007 in line
with current sales agreements.
Posted by Richard Price,
Editor Pipeline Magazine
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