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U.S. energy envoy: Sakhalin move discourages investment
Petroleum News
On a recent official visit to Moscow, U.S. Deputy Energy Secretary Kyle McSlarrow reiterated the U.S. government’s concern over Russia’s de-facto annulment of a 1993 tender awarding an ExxonMobil-led consortium a license to an offshore Sakhalin oil field.
“In the absence of some compelling reason, which I have yet to hear, that original tender ought to be honored to allow the project to go forward,” McSlarrow said, adding that he didn’t know whether annulment was final.
“The danger is that a contrary decision would have a chilling effect on the willingness of other investors to do business here in Russia,” McSlarrow said in a June 9 briefing of company and government officials.
In January, Russia said it wouldn’t issue a license for the development of the Sakhalin-3 oil project to the consortium which also includes U.S.-based ChevronTexaco and Russian state-owned oil major OAO Rosneft. The group has already invested $600 million in Sakhalin-3.
But the license was never issued due to the lack of a legal framework for production-sharing agreements and Russia has since passed laws to make those agreements unfeasible.
It is “clearly a bump in the road” toward closer cooperation on energy issues between the U.S. and Russia, McSlarrow said. Russia urged to pursue LNG McSlarrow also urged Russia to develop its potential for producing liquefied natural gas and become a bigger player in the gas export market at a time when demand in America is growing but production isn’t.
With proven gas reserves of 700 trillion cubic feet, Russia “ought to be a major player when it comes to LNG,” McSlarrow said.
He offered U.S. assistance to “allow U.S. companies that have the greatest experience in the world in building the entire LNG value chain... to partner with Russian companies in ways that allow us to share technology, and share exploration and production.”
The Associated Press contributed to this story
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