Sakhalin-1 Project Receives Award
for Excellence Nov 2008 |
|
ExxonMobil Announces Drilling of World-Record Well Sakhalin-1; 7 mi April 24, 2007 | Gazprom and Shell Finalize Sakhalin II Deal Shell 4/18/2007 |
Russia
Discusses
Majority Control of Sakhalin Energy Projects 5/26/2006 |
Russia
Report: Sakhalin Island November 2005 Shell is ‘hanging in there’ on Sakhalin Island as Russia increases the pressure |
Sakhalin
island looks to boost its visibility SAKHALIN OIL AND GAS PROJECTS |
|
Sakhalin New Modules Installed on Molikpaq | Sakhalin II Offshore Pipe Laying Completed Ahead Schedule |
PARTICIPATION OF KHABAROVSK KRAI COMPANIES IN SAKHALIN PROJECTS |
Shell is ‘hanging
in there’ on Sakhalin Island as Russia increases the pressure Published: Monday, 4 December, 2006, 01:01 PM Doha Time Cargo ships and cranes are pictured at Korsakov Port on Sakhalin Island. Shell is depending on Sakhalin to help boost reserves and revive falling output. It is scheduled to begin liquefied natural gas exports to Asia in summer 2008. LONDON: Royal Dutch Shell is “hanging in there”, company sources say, as Russia squeezes its $22bn Sakhalin-2 oil and gas project over cost overruns, environmental violations and to secure a stake for state firm Gazprom. Sakhalin-2 on the Pacific island of Sakhalin, north of Japan, is one of the world’s biggest and most ambitious energy projects and the largest foreign direct investment in Russia, according to operator Sakhalin Energy. The deal, one of three similar projects Russia signed in the 1990s, was supposed to mark a new era of co-operation. But the project, led by Shell and involving Japan’s Mitsui and Mitsubishi, has recently soured along with other foreign investments in Russia. “We’re hanging on in there,” said a Shell source who declined to be named. “There’s no issue with the schedule or with the total cost at the moment. The longer it goes on, the more difficult it gets of course.” A doubling of costs has infuriated Russia because under the terms of its production sharing agreement with the companies Russia will not see any profit until the costs are recouped. Near-record oil prices have only added to Russia’s frustration. Russia’s environment agency RosPrirodNadzor, has accused Shell of inflicting ecological damage to Sakhalin, a feeding ground for gray whales, and threatened legal action. It says contractors have illegally cleared forests, dumped soil in rivers and laid pipelines in areas prone to mudslides. Shell says it is working with Russia to find a solution. Chief executive Jeroen van der Veer has said he hopes to “resolve issues and misunderstandings through discussions.” In private, Shell sources say it is increasingly difficult to know who in Russia is calling the shots. “Now it’s got $20bn costings, different ministries and RosPrirodNadzor are saying: ‘There are environmental violations and we could shut you down for not painting around the doorhandles’,” said a source familiar with the Sakhalin project. “And who’s in control. Is it the Ministry of Natural Resources, the Ministry of Economic Development or is it Gazprom?” Another Shell source said Russian self-confidence had grown in tandem with surging oil prices. The world’s second biggest oil exporter and holder of the biggest gas reserves is keenly aware how important its energy supplies are to Europe and Asia. Foreign operators Shell, ExxonMobil and BP are finding the negotiating climate increasingly tough. “The Russian negotiating leverage is in a different place than it was. They are more self confident than they once were and they feel that anybody’s fair game,” the Shell source said. Shell is depending on Sakhalin to help boost reserves and revive falling output. It is scheduled to begin liquefied natural gas (LNG) exports to Asia in summer 2008, later than earlier planned. Shell spokesman Andy Corrigan said Sakhalin-2 was on track to start LNG exports in 2008. The project involves drilling for oil and gas in the Pacific Ocean, pumping it through 800km-long pipelines along the island, which lies in an earthquake zone, and turning the gas into liquid at a giant LNG plant. Russian gas export monopoly Gazprom plans to take a 25% stake in Sakhalin-2 through an asset swap with Shell but the doubling of the budget has created disarray. Gazprom may now demand a greater stake, taking some equity from Shell’s partners Mitsui and Mitsubishi. Shell currently has 55%, Mitsui has 25% and Mitsubishi 20%. Sources close to Shell said that was a possible outcome. “There is a lot of discussion taking place. We don’t know where it will end up, they don’t know where it will end up, but I think both sides have a vested interest in it being a fair outcome,” said the Shell source. Corrigan said talks with Gazprom were continuing, but declined further comment. Russian state auditor Sergei Abramov said on Monday he expects the Sakhalin-2 partners to accept a change in the terms of the production sharing agreement (PSA) that governs the project to improve Russia’s share. While Abramov said Russia would not unilaterally revise the PSA, it would never agree to a budget of $22bn. “Shell will have to come to terms with the fact that it has disappointed the Russians,” another Shell source said. – Reuters |
Sakhalin New Modules
Installed on Molikpaq Sakhalin Energy 7/20/2006 Sakhalin Energy reported that it has successfully completed the installation of the Molikpaq Tie-In (MTI) modules. As part of the construction and installation program of July, two intricate modules--each the size of a 10-story apartment block--were successfully lifted into position on the space-constrained deck using the Castoro 8, a mobile crane barge. In addition a new multi-million-dollar crane assembled locally in Kholmsk was also installed successfully. David Greer, Sakhalin II project director, referred to the Molikpaq Tie-In installation as “representative of engineering at its finest.” He congratulated the team involved in the installation on “getting the job done professionally and efficiently.” The Molikpaq platform, which is the heart of the Vityaz Production Complex, is located in Astokh Feature of Piltun-Astokhskoye oil field, 17 kilometers offshore northeastern Sakhalin Island. Currently, because of the challenging ice conditions in the Okhotsk Sea, the platform is producing some 6 months a year during the ice-free season. Sakhalin Energy commenced the commercial development of Piltun-Astokhskoye field in 1999. In seven work seasons since the 1999 first oil, Molikpaq has produced more than 70 million barrels of oil. The new modules will be part of the connection between the platform and the new onshore and offshore oil and gas pipelines, which are currently under construction. This will allow year-round production of oil and gas from the Molikpaq. First year-round production from the Molikpaq is expected in 2007. |
Russia Discusses
Majority Control of Sakhalin Energy Projects 5/26/2006 M2 Communications Russia's Ministry of Natural Resources said Thursday that two large oil projects operated by Exxon Mobil (NYSE: XOM) and Royal Dutch Shell PLC (NYSE: RDS) should be turned over to local companies. The statement follows steps by the Russian administration to exert more government control over its energy sector. The ministry didn't specify what steps, if any, should be taken regarding Exxon's Sakhalin-1 and Shell's Sakhalin-2 projects. Western analysts said the statement was likely a negotiating tactic designed to improve Russia's position at an upcoming summit. Russia has come under pressure to liberalize its energy industry and the country is expected to make energy security a key topic when the leaders of industrialized nations meet in July. Russian companies currently control minority stakes in the discussed projects. OAO Rosneft, the state oil company, controls 20 percent of Sakhalin-1 while OAO Gasprom, the sate gas company, is in negotiations for a 25 percent share of Sakhalin-2. The Sakhalin negotiations took almost ten years to complete and have substantially increased foreign investment in the region. Given the complexity of the contracts, it's highly unlikely the Russian government will reopen the contracts, despite their desire for domestic control. In a report, the Russian Academy of Sciences attacked the foreign controlled projects for delays, cost overruns and not accounting for Russian interests. The Ministry endorsed that report in a statement Thursday. |
SAKHALIN ISLAND PICTURES HERE
Long-term projection for sustained export gas production from
Chayvo, Odoptu and Arkuntun-Dagi to 2050ExxonMobil marks milestone with
Sakhalin-1 start-up
Chayvo field development expected to continue for a yearPam Boschee International Editor Offshore November 2005 – www.offshore-mag.com Once a penal colony unrecognized by much of the globe, Sakhalin Island now is a remote location gaining operational and technical prominence in the international oil and gas industry. With production start-up last month in the first phase of the Sakhalin-1 project, ExxonMobil's subsidiary, Exxon Neftegas Ltd. (ENL), began tapping the rich oil and gas reservoirs of offshore eastern Russia. The initial phase of the project will produce 50,000 b/d of oil by yearend 2005 and 250,000 b/d by year-end 2006 from the Chayvo field. Companion Russian domestic gas sales will start at about 60 MMcf/d and are ultimately expected to increase to about 250 MMcf/d by the end of the decade. Sakhalin-1 includes the Chayvo, Odoptu and Arkutun-Dagi fields. Together they contain an estimated 307 million tons of oil and 485 bcm of gas. Sakhalin-1 was declared commercial at the end of 2001 and has an economic life of about 40 years. ENL (30% interest) serves as operator of a consortium that includes: Japan's Sakhalin Oil and Gas Development Co. Ltd. (30%); Russia's Rosneft affiliates, RN-Astra (8.5%), Sakhalinmorneftegas (SMNG)-Shelf (11.5%); and the National Oil Co. of India, ONGC Videsh Ltd. (20%). Click on Image for Large Picture Once full production starts, crude oil will be processed at the onshore processing facility at the rate of about 250,000 b/d of oil and 800 MMcf/d of gas. Sakhalin-1 by the numbers * Ranks as one of the largest single foreign direct investment projects in Russia today * $40 billion in taxes, royalty payments, and state share of oil over the life of the project * $100 million to the Sakhalin Development Fund over a five-year period * $45 million in production bonuses * $3.2 billion in contrast awards to Russian companies (represents about two-thirds of total contracts to date) * $200 million in Sakhalin infrastructure upgrades * 13,000 direct and indirect local jobs will be created during the construction phase View from the top In a recent interview with Offshore, ENL’s President and ExxonMobil Development Co.'s Sakhalin-1 Project Executive Steve Terni talked about Chayvo's production future and later development of Odoptu and Arkutun-Dagi. 'We've installed two drilling Facilities in this first phase. One is the Yastreb, the onshore rig, which uses extended-reach drilling to tap reserve six miles from shore. At the same time, we set in place the Orlan light over the Chayvo reserve and will drill from there." Yastreb, which means "hawk" in Russian, is the world's largest land-based drilling rig - 22 stories tall - using extended-reach drilling (ERD). Orlan ("white-shouldered sear eagle") will provide drilling capacity for up to 20 wells. Yastreb is the largest fully winterized (+40/40'C) and most powerful rig in the industry, according to ENL With 12,000 hp (about 9,000 Kw) the rig 4 1600 mud pumps at 7,500 psi (about 500 bar). It is skid-mounted for batch drilling seismic design and is designed to withstand earthquakes. ENL says the rig's mud system is also unique in the industry. Compared with most rigs' 1,000 bbl capacity mud system, says ENL, Yastreb has a 2,000-bbl active, a 2,000-bbl reserve, and a 5,000-bbl bulk storage system. The company adds that the rig has a pipe barn, which no other land rig has, which was designed to bring tubulars in, take them up, and store them. They can be picked up in 90-ft sections instead of 30-ft sections. Combined, Yastreb and Orlan will drill more than 30 ERD wells, which will be the largest number of such wells in any one location globally. To date, seven ERD wells (four oil producers, two gas producers, and one injector) have been drilled at Chayvo and readied for initial production. The Orlan Platform sits right over the Chayvo reserve. Chayvo Z-2 (11,134 m) and Z-1 (10,995 m) are the third- and fourth longest ERD wells in the world, says ENL Z-2 is the longest ERD well ever drilled by ExxonMobil. Chayvo also claims the world's first 13 5/8in. casing installation using "mud over air" floatation and world record coiled tubing runs. Terni says there will also be an onshore processing facility (OPF). The well streams from the two sets of wells will flow to the OPF and "from there we'll be treating and selling some gas to domestic customers on the mainland of Russia. Those 20-year contracts are in place, and the customers are already receiving their gas." Once full production starts, crude oil will be processed at the OPF at the rate of about 250,000 b/d of oil and 800 MMcf/d of gas, says Terni. A 225-km export pipeline is being built from the OPF to the DeKastri export terminal, where crude will be loaded to specially designed tankers for delivery to international markets. With icebreaking support vessels and strengthened tankers, required because the strait between the mainland and the island is covered by ice for six months annually, year-round shipping will be possible, he adds. “The oil will be initially sold into the domestic market until our export facility is complete, but the long-term plan is to export oil. Once that starts around mid next year, we won't sell any more oil into the domestic market.” Initial natural gas production will be sold to two domestic customers, OAO Khabarovskenergo and OAO Khabarovskkraigas in the Khabarovsk Krai in the Russian Far East buyers will transport the gas to the Khabarovsk Krai through the pipeline systems of SMNG-Shelf and Daltransgas. There will be surplus gas that will have to be re-injected until such time as we develop the export market for the balance of the gas. We're in discussions with the Chinese and Japan for possible delivery by pipeline. "We don't have an anticipated date for initiation for that delivery. We are in discussions now with CNPC in China, but no agreement has been concluded as yet." Long-term projections are for sustained export gas production from Chayvo, Odoptu and Arkutun-Dagi to 2050. Maximizing on lessons learned Terni says, “The full development of Chayvo includes oil development in the initial investment phase with the companion domestic gas sale; the next step could be the development of the long-term export gas contract, which would be supplied from new additional wells at Chayvo. “The development of the other fields will follow as capacity becomes available in the export pipeline system and at the processing facility. The current plan is to bring Odoptu on next. "What we're trying to do is optimize the use tight now of the Yastreb rig and the other facilities at Chayvo. The rig has a full schedule for drilling wells this coming year, and once that's done, it could be moved up to Odoptu and begin drilling there. "However, if we enter into an export gas contract, then we'll leave Yastreb at Chayvo and consider another rig for Odoptu." He adds that the benefit of the company's step-wise development of the fields is that "we're taking one economic bite at a time." Each of the steps will be justified on its own merits. “We'll be able to take learning from our actual operating and execution experience in this remote location and frontier area and put that into our planning for subsequent phases. This will help us not only improve the management of the reservoirs from the operational perspective, but also help us control costs and finalize execution strategies for future phases." With Russian participation in construction at around 70% at the Chayvo site, Terni says the company is "getting to know the contractor community," and the local resource base is growing with vendors and service contractors who are establishing themselves now in the new market and who "will be available for us the next time around." He also discussed the challenges of finding qualified manpower for a project of this scale on an island with an unemployment rate of only 1.5%. "If you look at the combination of operations and construction, the demand for people is very high. With this unemployment rate, there really is no pool of labor on the island per se. Many of our Russian contractors bring in skilled labor from other parts of Russia. That's one source, and then there are some foreign contractors as well, engineers and skilled labor from other parts of the world." For foreign contractors and service providers who are interested in doing business with ExxonMobil for development of the remaining two fields, Terni recommends, "their best strategy is to hook up with Russian companies and learn how to do business in Russia." "We're clearly going to be looking to domestic sources as a priority in terms of maximizing our Russian content. That has worked well in the first phase where foreign companies have worked directly with Russian companies to do much of our project, and I believe that will be the modus operandi in the future as well." For further information about Russian companies now involved in Sakhalin, or about future contracting opportunities (all contracts have been awarded for Chayvo), visit www.sakhalinl.com, “contracting.” |
Far East representatives hope Moscow
exhibition will attract
investment. "Sakhalin is second only to Moscow for foreign
investment
in Russia and is number one in the Far East," said Michael Allen of the
American Business Center in Yuzhno-Sakhalinsk, the island’s main
city.
"It saw a jump from $140 million in 1998 to $1 billion last year. In
2000,
we expect this figure to drop to around $500 million – a hiccup that is
largely due to ExxonMobil’s drilling program having been held up by
difficulties
in obtaining a license." Allen said that the "main oil and gas projects
are currently Sakhalin 1 and Sakhalin 2, product-sharing agreements
started
in 1996 that began extracting oil from the Sakhalin shelf last year. In
addition, there are two or three more product-sharing agreements
waiting
in the wings." Offshore July 2003 wwwoffshore-mag.com
The giant Sakhalin Phase II project will test the skills of shell’s EP Projects team. Investment Co., of which Shell holds 55% along with partners Mitsui, 25%, and Mitsubishi, 20%. This massive project includes oil and gas development as well as an LNG facility. One of the project requirements is that it includes 70% Russian content. A Russian group has been established to devise a candidate list of contractors with the necessary qualifications and background to work on the project. In addition to the in-house capabilities of such companies, joint ventures will be considered with international companies. This will ensure that the best available technology is used on the project and will facilitate a transfer of technology to Russian firms for future application. According to Greer, there is already a considerable amount of civil engineering expertise available in Russia, and this makes a good starting point for the skills needed on Sakhalin. This project will have a life of 30-40 years, so it is critical to promote the development of skills required for this project within the domestic Russian labor force. While Sakhalin 11 will be a major undertaking, Greer said, none of the technology itself is new to Shell.Part of how the EP Projects group evaluates its role in such undertakings is to consider what the local operating unit of Shell has to offer. The global EP Projects staff then enhances these capabilities. Shell has broad experience in LNG projects for example. The company also has extensive surface and subsurface expertise. Still, the operating unit will certainly need additional manpower and may require technology that it is not familiar with. These are areas where EP Projects will help. Another example of how EP Projects interacts with the rest of Shell is the group's involvement on the Bonga FPSO offshore Nigeria. This FPSO was a huge technical step change for Shell's Nigeria operation. Greer said the company had to assess its capabilities in that country. The decision was made that the technical expertise was held by Shell in Houston. So it was necessary to transfer this knowledge to the Nigerians who would be operating the facility. While the industry continues to lament the small number of new engineers who choose a career in E&P programs like EP Projects ensure that the new recruits who do come in will have the support they need to succeed and a variety of fascinating challenges to help them develop. EP Projects' future is filled with opportunities. This year, foreign investors are expected to inject $350 million into the oil-shelf projects off Sakhalin, with each dollar of direct investment in shelf projects yielding two dollars for the local economy, officials said. Sakhalin is the fourth largest in industrial manufacturing out of the nine Far East regions, a figure the exhibition hopes to improve this year. The local mining industry has already undergone improvements – 20 worked-out mines have recently been replaced, a step which local authorities hope will lead to cheaper coal supplies and lower overheads for industry. One problem facing the local economy is the dwindling deposits of onshore oil and gas fields. These are substantially depleted, and oil extraction has been declining continuously since 1984. The good news for the area is that new fields have recently been discovered off the northeast shore of the island. The island has substantial resources of oil, gas, coal and gold, with oil and gas the main areas of foreign investment – constituting 15 percent of Sakhalin’s total commodity output. The island, with a population of 670,000, is
seven hours
ahead of Moscow time and situated in the Okhotsk Sea north of Japan.
Russia
and Japan have been in conflict since the early 19th century over the
volcanic
Kuril islands, which neighbor Sakhalin. Russia won back the islands
along
with southern Sakhalin after World War II, although the dispute
continues
as Japan still lays claim to the islands. Earthquakes continuously
threaten
Sakhalin and the Kurils, the most destructive in recent times being the
1995 quake, which destroyed the Sakhalin town of Neftegorsk. Next month, a new, major project involving supplying electricity from Sakhalin to Hokkaido, Japan, is set for approval. The $12 billion plan was first discussed between Anatoly Chubais and the governor of Sakhalin two years ago, and should become a reality after feasibility studies are completed in April, officials said. (Information on the exhibition can be obtained
by calling
the Sakhalin representative in Moscow at 203-5141.) |
BISNIS Russian Far East/Oil and Gas Update,
21 July 2003 KHABAROVSK KRAI
COMPANIES & SAKHALIN OIL AND
GAS
PROJECTS
AUTHOR: ANDREI VASENYOV, BISNIS REPRESENTATIVE IN KHABAROVSK, RFE SUMMARY SAKHALIN PROJECTS OVERVIEW The Sakhalin oil and gas projects were the first in Russia to employ production-sharing agreements (PSAs). This approach attracted a huge amount of foreign investment by providing favorable tax procedures (substitution of the majority of federal and local taxes with product sharing) and guaranties of stability for the whole period of the project implementation activities (30-40 years). This, in turn, allowed for the successful development of these large-scale projects in harsh environmental and climatic conditions. Sakhalin-1 Sakhalin-1 is the second project implemented under a PSA on the Sakhalin shelf. The estimated recoverable reserves of Chaivo, Arkutun-Dagi, and Odoptu deposits total 307 million tons of oil and 485 billion cub. m. of gas. The expected daily oil production amounts to 250,000 barrels (33,000 tons per day). Sakhalin-1 project intends to develop these oil and gas resources in phases, using both offshore and onshore wells. The first phase of development will focus on the Chayvo and Odoptu fields, with first oil expected from Chayvo at the end of 2005 and from Odoptu in early 2007. The oil will be exported via pipeline to a marine tanker terminal at DeKastri (in Khabarovsk Krai). Limited gas production will be available in this initial phase to help meet Russian domestic demand. Future phases of development envision construction of a natural gas pipeline to Japan and development of the Arkutun-Dagi field. The consortium developing Sakhalin-1 comprises U.S., Russian, Indian and Japanese companies, which will invest as much as $12 billion throughout the life of the project. The members of the consortium are Exxon Neftegas Limited, USA (30 percent shareholder), ONGC Videsh Limited, India (20 percent); RN-Astra, Russia (8.5 percent); Sakhalinmorneftegas-Shelf, Russia (11.5 percent); and Sakhalin Oil and Gas Development Co., Ltd., Japan (30 percent). Exxon Neftegas Limited, a subsidiary of U.S.-based Exxon Mobil Corporation, is the operator of the project. According to Neil Daffin, the President of Exxon Mobil Limited, once the Sakhalin-1 project has proceeded to the exploitation stage, the projects’ costs increased considerably. Russian companies are winning an increasing number of tenders. In 2002, many Russian businesses obtained large contracts, and the overall value of contracts signed with Russian suppliers and contractors exceeded $1 billion. Sakhalin-2 Sakhalin-2 was the first Russian project to be implemented under the PSA regime. The total calculated recoverable reserves of the two offshore deposits, Piltun-Astohoonskoye (oil deposit) and Lunskoye (gas deposit), are estimated at 150 million tons of oil and 642 billion cub. m. of natural gas. The operator of Sakhalin-2 project is the Sakhalin Energy Investment Company Ltd. (SEIC), composed of Mitsui (Japan) - 25 percent share, Mitsubishi (Japan) - 20 percent, and Royal Dutch/Shell (UK/Netherlands) - 55 percent. During 1996–2001, approximately $2 billion was allocated for the project implementation. The direct profit of the Russian side, including bonuses, payments to the Fund for Sakhalin Development, reimbursement of the preliminary Russian expenditures for the exploration activities was $181 million; Sakhalin Oblast received $154 million. The Sakhain-2 project is responsible for the development of the local industrial infrastructure needed oil and gas production. The approved Complex Plan for the project development envisions total capital investment exceeding $8 billion. Once the production facilities reach their pre-planned production capacities, the annual extraction of oil and condensate within the Sakhalin-2 project will amount to 8.5 million tons; natural gas - 19 billion cub. m. Sakhalin-3 Sakhalin-3 project encompasses the
development
of two independent projects: Kirinskiy Perspective Block (roughly
687 million tons of oil and condensate, 873 billion cub. m. of natural
gas) and Vostochno-Odoptinskiy & Ayashskiy Perspective block
(roughly
160 million tons of oil and condensate, 67 billion cub. m. of natural
gas).
Both projects require geological and exploration research to determine
the exact volume of recoverable oil reserves and exact location of oil
and gas deposits. The operator and investor of the first project is
PegaStar
(USA); its founders are Mobil Russia Ventures Inc, Texaco Exploration
Sakhalin
Inc, NK Rosneft and Rosneft-Sakhalinmorneftegas JSC. The investors of
the
second project are Exxon Neftegas Ltd, NK Rosneft and
Rosneft-Sakhalinmorneftegas
JSC. While striving to maximize Russian content and contract as many local companies as possible, the operators of Sakhalin-1 and 2 keep in mind a number of requirements when evaluating candidates and selecting eligible contractors and suppliers. Safe operation, compliance with environmental regulations and existing legislation, competitiveness of costs and the ability to deliver the requirements on schedule are among the primary demands. The Sakhalin-1 project operator Exxon Neftegas Limited has been successfully working with the Sakhalin Oblast Administration and the Russian Ministry of Economic Development and Trade to establish a Joint Committee on Russian Content. In order to inform Russian suppliers and subcontractors about the project objectives, standards, and bidding procedures and to increase their competitiveness, special Russian supplier seminars were held in Khabarovsk, Yuzhno-Sakhalinsk, and Moscow. Russian and English-language websites (www.sakhalin1.com and www.sakhalin1.ru) were launched to inform potential contractors and vendors about major contracting opportunities and upcoming tenders. Activation of the Sakhalin oil and gas projects during the last 3 years resulted in an increase of the Khabarovsk Krai companies’ participation. As of early 2003, six major contracts were signed with the Khabarovsk Krai companies worth some $200 million. Current Sakhalin contractors are Amurskiy Shipbuilding Yard (Komsomolsk-on-Amur), Vostok airline (Khabarovsk), and Dalmostostroy (Khabarovsk). Three Khabarovsk Krai design institutes-- DalTISIz, Dalaeroproekt, and Dalgidrovodokhoz--have also been extensively involved in the projects. Transportation Companies On June 2003, Exxon Neftegas Limited signed its second 5-year contract with Vostok airlines JSC from the Khabarovsk Krai. The company was established in 1945 and in 1993. Fifty-one percent of the airline’s shares belong to the federal government, 22.75 to the Krai government, and 26.25 percent to private shareholders. Vostok’s primary fleet consists of seven Mi-8MTV helicopters, Mi-8T, six An-28 planes, and three An-38-100 planes. Since 2001, Vostok is an official provider of airline services for the United Nations in East Timor. Vostok obtained its first Sakhalin contract for the provision of air transportation services in 1997, surpassing four competitors. Although this was the airline’s first exposure to the contractors’ selection system, it was able to comply with tough requirements of the project operator, which included the availability of the fully prepared aircraft, flight safety management systems, and qualified aircrew and technical personnel. Especially strong attention was paid to personnel discipline. In order to be eligible for participation in the Sakhalin-1 project, Vostok airline had to obtain some specialized certificates. Construction Companies In autumn 2002, Exxon Neftegas Limited contracted with Dalmostostroy JSC (Far Eastern Bridge Construction Company, Khabarovsk) for the construction of Chaivonskiy Bridge. The 830-meter bridge will connect the drilling site on the Chaivo Island with the coastal product-processing complex. The passage will first be used to transport heavy (600 tons) production equipment, and after production begins will serve for the daily transportation of personnel and cargo to the drilling site. Construction of the Chaivo bridge is one of several projects recently passed over to Russian subcontractors by ABB Lummus Global (Moscow) as a part of the company’s own contract for the detail planning, logistics support, and construction of coastal facilities for Sakhalin-1 project. The other projects involve SakhNIPImorneft (design) and Sakhalinmorneftemontazh JSC (general construction) Sakhalin companies and Amurskiy Shipbuilding Yard (Komsomolsk-on-Amur, Khabarovsk Krai). The shipyard was contracted for the construction of 54 reservoirs for storage of diesel fuel and hydrocarbon base for drilling liquid. In 1996, Amurskiy Shipbuilding Yard JSC became a prime contractor of Sakhalin Energy to modernize Moliqpak, an offshore oil-drilling platform. In 2002, the shipyard and Exxon Neftegas Ltd signed a contract on refitting and modernization of Orlan, an oil-drilling platform in the framework of Sakhalin-1 Project. Other parties of the $140 million contract include Hyundai (Republic of Korea) and Natchik (USA). As a result of the shipyard’s new contract to refurbish the Orlan platform, its partner, FIAS (USA) obtained a $ 31 million contract to act as the procurement company - procuring all parts of equipment and dealing with certification, inspection, and logistics. The shipyard intends to expand its participation in Sakhalin projects and plans to lease working premises at the Severny shipyard (Sovgavan). The shipyard’s primary business activity is production of machinery (propellers, shaft, steering gear, winches, capstans, ladders, bridge bearings, screws, etc.). In general, the yard comprises hull, assembly and welding, pipe assembly, machinery, metallurgical, heat treatment production, a testing center, and electroplating shops. The enterprise produces sea and river vessels, vessels with air pillow maintenance, vessels with hydrofoil wings, ocean trawlers and refrigerators, and others. Over 60 Khabarovsk Krai companies have submitted applications for participation in upcoming Sakhalin tenders. Even a larger number of Krai enterprises wish to become suppliers or contractors of the Sakhalin oil and gas projects. The primary reasons why many Khabarovsk Krai companies failed to win tenders are lack of international business experience; failure to produce equipment that meets the environmental, climatic, technical or ergonomic requirements; failure to ensure stable on-time delivery of their products and/or services to the destination site; poor safety records; and a lack of quality and standards certifications. Many of Khabarovsk Krai enterprises are
willing to establish
joint ventures with U.S. companies so that they can expand their
services
and improve the quality of their products to meet higher international
quality requirements. At the same time, the U.S. companies could also
benefit
from such partnership and become subcontractors to their Russian
partner
or win subsequent tenders to supply equipment, machinery, parts,
services,
etc. CONSORTIUM OF THE
RFE ENTERPRISES In
order to promote
the participation of Khabarovsk Krai companies in Sakhalin oil and gas
projects and increase their competitiveness through informational and
legal
support, the Krai Government and a number of large manufacturers,
suppliers,
services providers, transportation companies and design institutes seek
to establish a consortium of Russian Far East companies. The consortium
will obtain the legal entity status once it receives state
registration.
Its headquarters will be located at Amurskiy Shipbuilding Yard JSC, and
the shipyard’s director will be responsible for the organization of the
consortium structure and attraction of Khabarovsk manufacturers and
suppliers
to participate in the construction of the Orlan platform.
The consortium will assist its members in completing tender application documents for the preliminary competition and selection stages and organize and conduct specialized training seminars and courses for the top managers of the companies. It will also provide informational services, including compiling of databases, conduct and participate in symposiums, conferences, exhibitions and other events. The members of the consortium seek to develop partnerships with similar foreign and international organizations to share experience. The consortium’s activities are expected to increase Khabarovsk firms’ chances of obtaining contracts. CONTACT INFORMATION U.S. Consulate General Vladivostok U.S. Commercial Service 32 Pushkinskaya St., Vladivostok, Russia Tel: (7-4232) 49-93-81 Fax: (7-4232) 30-00-92 Email: William.Lawton@mail.doc.gov Contact: William S. Lawton, Principal Commercial Officer BISNIS in Khabarovsk 18 Muravyeva-Amurskiy Street, office 307 Khabarovsk 680000, Russia Tel/Fax: (7-4212) 305-757 Email: bisnis@vasandr.kht.ru www.bisnis.doc.gov www.bisnis-eurasia.org Contact: Andrei Vasenyov, BISNIS representative For contact information of relevant Khabarovsk krai officials and brief descriptions/contact details of Khabarovsk Krai Companies that are acting and potential contractors of Sakhalin oil and gas projects, please contact Ellen House, BISNIS trade specialist for the RFE email: Ellen_house@ita.doc.gov, tel: 202-482-2284 or Chris Christov, BISNIS trade specialist for oil and gas sector email: chris_christov@ita.doc.gov, tel: 202-482-4199 To use MyBISNIS, go to:
www.bisnis.doc.gov/MyBISNIS.cfm |