Support The Moscow Times!

No Conclusion Seen in Sakhalin Talks

ExxonMobil has held talks of record length with the government over the global oil industry champion's plans to spend $3.5 billion on an offshore project near Sakhalin Island this year, but it has won no approval as yet.

There are no deadlines in sight as the company is answering inquiries from the Energy Ministry-led supervisory board, Exxon spokeswoman Dilyara Sydykova said Friday. Nevertheless, the company is hoping to reach an agreement in the near future, she said.

The government is accusing Exxon of inflating costs. Higher costs mean less revenue for the federal budget because development is governed by a production-sharing agreement.

Exxon had to suspend work at its $17 billion Sakhalin-1 project for several weeks during similar talks last year in an effort — the second-longest one on record — to get its budget approved by the project's board, known as the Authorized State Body. The assent came on April 8 last year.

This time, work on the fields did not grind to a halt because the company had secured permission to spend $1 billion this year as a portion of its spending needs.

An Energy Ministry spokesman said he was unable to comment immediately Friday evening on why the final approval was taking so long.

In the other reported delay, the government had not endorsed Exxon's budget for 2006 until March 29 that year.

Exxon is the operator in the project that it co-owns with Rosneft, Japan's Sodeco and India's ONGK Videsh. The consortium, which has been producing oil at the Chayvo field for a few years, is focusing its investment on the nearby Odoptu field.

Gazprom has been pushing the consortium to sell it the project's gas, saying no other option is possible. Exxon believes that it can sell to China because the production sharing agreement exempts it from Russian legislation establishing Gazprom as the country's gas export monopoly.

Sign up for our free weekly newsletter

Our weekly newsletter contains a hand-picked selection of news, features, analysiss and more from The Moscow Times. You will receive it in your mailbox every Friday. Never miss the latest news from Russia. Preview
Subscribers agree to the Privacy Policy

A Message from The Moscow Times:

Dear readers,

We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."

These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.

We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.

By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.

Once
Monthly
Annual
Continue
paiment methods
Not ready to support today?
Remind me later.

Read more