The Telegraph
Since 1st March, 1999
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Russia wants a share of ONGC Sakhalin spoils

New Delhi, July 5: With the Sakhalin oilfield turning out to be a bonanza for ONGC-Videsh (OVL) and its partners Exxon-Mobil and Sodeco of Japan, Russia wants to ensure that it too gets a fair share of the economic spin-off from the project.

Sources disclose that Russia has imposed the condition that at least 60 per cent of the contracts related to the Sakhalin I project should be given to Russian companies.

This is posing a problem in some hi-tech areas where the Russian companies do not have the requisite expertise. The joint venture route is being explored to find a way to break the impasse that has delayed the project. However, a senior ONGC official said the deadline for the commercial production of oil to start would not be pushed beyond two or three months of the original date. The oilfield is expected to go on stream by the end of 2005, he said.

The consortium will also be investing $ 75 million for financing social welfare projects on Sakhalin island in the vicinity of the giant oilfield. The money will be spent to build schools, hospitals and roads on the tiny island which has a population of 7,50,000. Since the oil find in the Sakhalin I field has turned out to be much bigger than what was initially estimated, the Russians are keen to ensure that the local population should also benefit from the project.

A total of over $ 3 billion worth of contracts are already reported to have been awarded for the project. A second-hand drilling platform has been purchased for $ 80 million and has been towed from Prudhoe Bay in Alaska to the Amur shipyard in Russia for refurbishing.

The oilfield is situated in the upper latitudes and temperatures during winter dip to below - 35 degrees centigrade. The consortium will be using a huge ice-breaker to clear the way for double-hulled ships that will carry out the crude from the oilfield. The trial runs for the ice-breaker are reported to have been carried out successfully in February.

Similarly, special ships with reinforced hulls to take the buffeting in the ice-bound waters of Sakhalin will have to be deployed. The cost of each ship is expected to be in the region of $ 200 to 300 million.

Syria oil blocks

PTI adds: OVL has bagged a Syrian oil block in partnership with US firm IPR International. It has been awarded the onland block 24, company sources said.

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