See where the majors are putting their investments.
Rosneft, BP Do Not Find Oil on Two Sakhalin Blocks
MOSCOW (Reuters) - Russia's state oil firm Rosneft said on Friday it would halt work at two oil exploration blocks on Russia's remote eastern island of Sakhalin, after failing to discover major oil or gas reserves.
Sakhalin is considered one of the most promising new oil and gas areas in Russia. Exploration wells have rarely proved to be dry so far, which has prompted almost all international majors to commit multi-billion dollar investments in the region.
Neighbouring Japan is counting on Sakhalin to cut its dependence on energy supplies from the volatile Middle East.
But Rosneft President Sergei Bogdanchikov told a news conference on Friday the firm's joint venture with oil major BP had very poor exploration results on Sakhalin-4, known as the Astrakhan block.
"Exploration of the Astrakhan block showed that its reserves are not commercially attractive," said Bogdanchikov. The $2.5-billion project was previously believed to hold up to 100 billion cubic metres of gas.
Bogdanchikov also said that the firm was disappointed by the results of exploration on the Sakhalin-6 block, which was initially believed to contain reserves of up to 2.2 billion barrels of oil equivalent.
The block belongs to a Russian oil firm Alfa-Eco.
"Additional evaluation of the Sakhalin-6 project showed its low efficiency and we decided not to proceed with exploration," said Bogdanchikov.
Rosneft and BP set up a joint venture to develop blocks Sakhalin-4 and Sakhalin-5 in 2001. Bogdanchikov said the joint venture would continue exploration on the Sakhalin-5 block.
He also said Rosneft had obtained a new exploration licence for a block located between Sakhalin-4 and Sakhalin-5, known as Zapadno-Shmidtovsky, which it planned to include in the joint venture with BP.
Sakhalin's most successful project to date is Sakhalin-2, led by Royal Dutch/Shell, which has been producing oil since 1999 and is planning to build the world's largest liquefied natural gas (LNG) plant by 2006.
Another project, Sakhalin-1, led by U.S. ExxonMobil, plans to produce its first oil in 2005. The two projects are estimated to contain up to three billion barrels of oil and 800 billion cubic metres of gas. They will require a combined $22-billion in investment.
© Reuters Limited 2003.
Reuters Limited |
