OREANDA-NEWS. On April 18, 2009 Sakhalin Energy, the operator company of the Sakhalin II Project, celebrated its 15th anniversary, reported the press-centre of Sakhalin Energy.

Enormous work has been done since the company was set up to develop the riches of the Sakhalin shelf, culminating in the launch of the production and export of a hydrocarbon product totally new to Russia – liquefied natural gas, or LNG – and Russia getting access to a totally new market – the Asia-Pacific.

Thanks to the constructive cooperation and unique experience of major corporations representing all the continents, an integrated oil and gas infrastructure, which crosses the island from north to south, has been built within a single project. This is a process chain, comprising three oil and gas platforms installed off north-east Sakhalin, the offshore and onshore TransSakhalin pipelines, an onshore processing facility and Prigorodnoye asset with an oil export terminal and Russia’s first LNG plant.

The Sakhalin II Project has progressed through the following milestones:

1994 – the signing of the first Production Sharing Agreement in Russia;

installation of the first ice-resistant oil and gas production platforms in Russia;

 introduction of Vityaz Crude, a new brand of Russian crude oil, to international markets;

procurement, for the first time in Russia, of a project financing from a consortium of international lenders for Phase 1 and Phase 2, the latter being a record-breaking project financing ever provided to Russia.

Russian companies contributed enormously to the Sakhalin II Project. Sakhalin Energy has awarded a total of over US12 billion in contracts to Russian companies. By working for the Project, Russian contractors gained invaluable experience of international cooperation and the management of a giant project to international best practice and advanced management models.

Sakhalin Energy’s activity has already yielded some US 1 billion proceeds to the Russian budget in the form of taxes, royalty, etc. A total of US 600 million upgrades of public infrastructure have been carried out in Sakhalin. The island’s social sphere has also been developed. As a responsible society member and a corporate citizen, the company has worked to implement various sustainable development projects and a wide range of social programmes.

But the greatest of all the achievements, a real geopolitical milestone and the culmination of 15 years of hard work, was the inauguration on 18 February 2009 of Russia’s first liquefied natural gas plant followed by the first offloading of LNG that sailed off to buyers in Japan on 29 March 2009.

“This is an important stage in the life of Sakhalin and a great gift to Sakhalin Energy on its 15th anniversary”, said Sakhalin Governor A.V. Khoroshavin. “What pleases me most is that Sakhalin residents are a majority in the company that has achieved so much.”
Sakhalin Energy’s work to implement the Sakhalin II Project helped Sakhalin, a remote area with high economic risks, to evolve as a new international energy hub, and Russia to acquire the status of a global energy supplier.

“Today I am proud to say that our first goal is achieved!”- said Sakhalin Energy’s Chief Executive Officer Ian Craig. “Russian oil and gas are now being safely and efficiently delivered to customers in the Asia Pacific region and beyond. We have some a long - hard, but exciting - way to make that dream come true. We achieved a great deal over the past 15 years. An equally important task lies ahead – ensuring a smooth build up to full production and maintaining that in the years to come.”