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Sakhalin Project - A Challenging Area Explored

This paper is created by Anupam Basu

Sakhalin II is the world’s biggest integrated oil and gas project. It is being built from scratch in the harsh subartic environment of Sakhalin Island in the Russian Far East. Phase 1 involved the installation and first oil production from the Vityaz Production Complex at the Piltun-Astokhskoye field in 1999. The complex incorporated an offshore platform “Molikpaq”, a single anchor leg mooring and a floating storage and offloading unit. Phase 2 includes the installation of two further platforms, 300 kms of offshore pipelines connecting all three platforms to shore, more than 800 km of onshore oil and gas pipelines, an onshore processing facility, an oil export terminal and the construction of Russia’s first liquefied natural gas (LNG) plant and associated export facilities.

Two oil and gas fields are being developed offshore Sakhalin Island in the Sea of Okhotsk: Piltun-Astokhskoye and Lunskoye. Associated infrastructure has been constructed onshore. Piltun-Astokhskoye is primarily an oil field and Lunskoye is primarily a gas field. The project is managed and operated by Sakhalin Energy Investment Company Ltd. (Sakhalin Energy).
Sakhalin II is of vital importance to Russia's future energy policy. For this reason, in 2006 the Russian government targeted the foreign owners of the development, forcing them to sell a majority stake to Gazprom.

The field is situated in an area previously little touched by human activity, causing various groups to criticize the development and the impact it will have on the local environment.
The two fields contain an estimated 1,200 million barrels (190,000,000 m3) of crude oil and 500 billion cubic meters (18 trillion cubic feet) of natural gas; 9.6 million tonnes of liquefied natural gas a year and about 180,000 barrels per day (29,000 m³/d) of oil will be produced.The total project cost until 2014 was originally estimated by Shell to be between US$9 and $11 billion. However, the costs...