Exxon delays Sakhalin-1 production to keep costs down

Vol 7, PW 20 (17 Dec 03) News in Brief

Operator ExxonMobil is also concerned about rising costs at Sakhalin-1.

PETROWATCH learns Exxons concerns were discussed during a 4th December meeting in Delhi between senior vice president Rex Tillerson and oil minister Ram Naik. According to a source, Tillerson told Naik that the Exxon project team at Sakhalin-1 has been asked to, modify the development plan so as to delay production by three months to keep costs down.

Sakhalin-1 will now begin commercial production by September 2006, but the plateau of 250,000 b/d will be the same. However, the Sakhalin-1 consortium is, examining the possibility of getting some early revenue by producing about 35,000 b/d.

Tillerson also told Naik that the projects longest horizontal reach well (about 11-km) was performing better than anticipated and producing more than 20,000 b/d. Tillerson said Sakhalin-1, would be more profitable than anticipated.