OPERATIONS

Sakhalin-2 cost overruns played down

The Royal Dutch/Shell-led consortium running Russias largest single oil and gas project, the Sakh...

According to Steven McVeigh, Sakhalin Energy CEO, “We’ll continue to get more contracts in Japan. We’re working on a number right now [and] I’d hope by the end of the year we’ll see another couple of contracts there.”

The need is pressing primarily because the 3.4 million metric tonnes being shipped to Japan, starting in 2007, represents less than one-third of the Sakhalin-2’s output and because of the announcement by Shell, where the Anglo-Dutch giant admitted the project’s second phase has gone US$2 billion over budget.

As announced in EnergyReview.net earlier, insiders have attributed the cause of the overruns to construction work on pipelines, platforms and such. McVeigh, however, would not be drawn upon the subject.

“The partners haven’t increased the budget [and] as far as any cost increases that amount to that magnitude, I don’t know where they came from. The US$10 billion planned budget for the project will be spent through 2014,” said McVeigh.

“There’s always pressures on a project of a long-term nature like this [and] any increase [will] need to be discussed with the Russian government first,” added McVeigh.

Sakhalin Energy is jointly-owned by Shell, Mitsui & Co and Mitsubishi Corp.

TOPICS:

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

editions

ENB CCS Report 2024

ENB’s CCS Report 2024 finds that CCS could be the much-needed magic bullet for Australia’s decarbonisation drive

editions

ENB Cost Report 2023

ENB’s latest Cost Report findings provide optimism as investments in oil and gas, as well as new energy rise.

editions

ENB Future of Energy Report 2023

ENB’s inaugural Future of Energy Report details the industry outlook on the medium-to-long-term future for the sector in the Asia Pacific region.

editions

ENB Cost Report 2021

This industry-wide report aims to understand current cost levels across the energy industry