New Delhi, Feb. 25 (PTI): State-run ONGC Videsh Ltd’s mega Sakhalin-1 project in Russia is headed for trouble after Kremlin refused to approve its budget and work plans, leading to suspension of work on future phases.

The $17-billion Sakhalin-1 project, where OVL has a 20 per cent stake, comprises three offshore fields — Chayvo, Odoptu and Arkutun-Dagi. Of these, the Russian authorities have not approved the work programme of Odoptu and Arkutun-Dagi.

The authorised state body did not approve the budgets and work plans, forcing Exxon Mobil, the operator of the Sakhalin-1 project, to suspend work on the two deposits, sources said.

However, production from Chayvo, which started pumping oil in 2005, will not be impacted, they said.

The Chayvo field has seen a 23 per cent fall in production since it started pumping oil. Output has tumbled to about 1,93,000 barrels of crude oil per day from a February 2007 peak of 2,50,000 bpd. Production may slide another 11 per cent in 2009. The Sakhalin-1 partners are looking at untapped reservoirs in adjacent rock formations to maintain output. Odoptu and Arkutun-Dagi would have helped them to sustain production to 2050.