Sakhalin-3 deal with Exxon unlikely

Petroleum News

According to a recent article in Vedomosti, a Russian business daily, Russia does not intend to revive production sharing agreements with Western oil majors, including its Sakhalin-3 deal with ExxonMobil. The newspaper reported that Russia’s Natural Resources Minister Yuri Trutnev said he was against reviving production sharing agreements that guarantee investors tax certainty for the life of a project. The PSA “regime is very subjective and therefore creates chances for corruption,” he said. He also said he is considering withdrawing a license for Kovykta, a large eastern Siberian oil field, from Surgutneftegaz. Russia came close to abolishing the PSA system in 2003, contending the regular tax regime was sufficiently stable. Only three PSA projects, in advanced stages of development, are still in existence, including Sakhalin-1 and Sakhalin-2, headed by ExxonMobil and Shell and Total’s Kharyaga project in Siberia. ExxonMobil had said it would proceed with the 3.3 billion barrel Sakhalin-3 project under the regular tax regime, but Russia announced in January it would put the project out for an open tender.