the RUSSIA oil & gas competitive intelligence report - Report Buyer

Russia Oil and Gas Competitive Intelligence Report 2010
9.6mn tpa of LNG and around 900,000b/d of crude oil. As of December 2006 Sakhalin Energy is majority
owned by Gazprom (50% plus one share) alongside former majority owner Shell (27.5% minus one
share), Mitsubishi (12.5%) and Mitsui (10%). Gazprom paid US$7.45bn for its majority stake. Roughly
two-thirds of Sakhalin-II’s LNG exports will be exported to nine utilities in Japan, while the remaining
third goes to South Korea and North America.
In March 2009, Osaka Gas signed an SPA to buy 200,000tpa of LNG from Sakhalin-II from 2011
without disclosing the financial terms.
Wintershall – Summary
BP – Summary
Wintershall is an upstream subsidiary of German chemical group BASF. The company has two major
projects in Russia. The first, the US$3bn Yuzhno (South) Russkoe gas project, holds recoverable natural
gas reserves of more than 600bcm, and reach plateau production rate of 25bcm per annum in mid-2009.
The companies have a preliminary agreement in place to supply over 800bcm of gas to Europe to 2043
through BASF’s distribution arm Wingas. The second project is the US$1bn Achimgaz JV in the Yamal-
Nenets region, in which Gazprom and Wintershall are equal partners. It came onstream in July 2008 and
produced around 1bcm and 6,000b/d of condensate in 2009 and is expected to peak at 7.5bcm and
55,000b/d of condensate. The project’s lifespan is put at over 40 years.
BP's presence in Russia is now concentrated on the TNK-BP JV, with the British major pulling out of the
CPC pipeline consortium and significantly reducing its Sakhalin exposure. BP has been active in Sakhalin
since 2006, when it launched a 49:51 JV with Rosneft to develop Sakhalin-IV and -V areas in the Sea of
Okhotsk. The most promising acreage in Sakhalin-IV was thought to be the West Schmidt Block, with
reserves estimated at up to 3bn bbl of oil and 255bcm of gas. Two exploration wells were drilled at the
Medved and Toiskaya structures in 2007 but both disappointed. Following extensive interpretation of
seismic data, BP appears to have decided that the block holds little commercial prospects and in March
2009 abandoned the Sakhalin-IV project.
In February 2010, BP and Rosneft also relinquished the East Schmidt Block at Sakhalin-V. BP and
Rosneft said that after evaluating extensive seismic data they decided not to proceed to the drilling phase,
again owing to poor commerciality. The JV, however, has chosen to keep the other permit in the
Sakhalin-V project, the Kaigansky-Vasuykanskiy (KG) Block. The partners drilled two deepwater wells
at KG in 2006 and have been sufficiently encouraged by the results to shoot more seismic data in 2010 in
preparation for further drilling. Estimated reserves at the only certified discovery at the block, dubbed the
Kaigansko-Vasyukanskoye Sea field, are put at 118mn bbl of oil and condensate (ABC1).
With all synergy between Sakhalin-IV and Sakhalin-V now lost, any commercial discoveries at the KG
block are most likely to be developed in conjunction with the Sakhalin-III project further south.
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