Sakhalin-1 Project Benefits

The Sakhalin-1 Project, operated by Exxon Neftegas Ltd, is one of the largest international investments in Russia and is an excellent example of the multi-faceted benefits that can be provided by a successfully developed and operated world-class oil and gas project in Russia.

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General Benefits

  • Total estimated reserves of 2.3 billion barrels of oil (307 million tons) & 17.1 trillion cubic feet of natural gas (485 billion cubic meters)
  • Over 885.3 million barrels (118,2 million tons) of oil and condensate exported
  • 939 billion cubic feet (over 27 billion cubic meters) of natural gas delivered to Russian Far East customers
  • State-of-the-art technologies and management processes utilized to maximize production, while maintaining the highest levels of safety, environmental, and operational performance
  • Environmental expenditures of nearly US$ 3.6 billion to protect local wildlife, habitats, and land uses

Federal and local government benefits

  • During the life of the project, over US$ 89 billion in taxes, royalty payments, and the state’s share of oil and gas is anticipated to be paid to the Russian state
  • Since its start-up, the Sakhalin 1 project has generated over $16 billion in state share of oil and gas, tax and royalty payments to the Federal and Regional Governments which includes more than $6.6 billion to the Sakhalin budget
  • US$ 100 million provided to Sakhalin Development Fund
  • US$ 40 million of bonuses have been paid to Russian Federation

Russian content

The Sakhalin-1 Consortium is committed to contracting with as many local companies as possible and providing jobs for as many Russian nationals as possible.

  • Over 700 Russian nationals employed directly by ENL
  • Since 2002, almost 300 Russian and Sakhalin citizens have been selected for special technical training and hired as technicians
  • Over US$ 16 billion in contracts awarded to Russian companies or joint ventures (over 70% of the total contracts awarded to third party vendors)

Contractors, subcontractors and vendors

Russian content is one of the key criteria in the Sakhalin-1 contracting process. While striving to maximize Russian content opportunities, however, preference is given to vendors that are able to effectively support the project objectives, including safety and health, environmental compliance, quality, maximizing profitability, and achieving scheduled completion.

To assist in maximizing the involvement of Russian contractors and vendors, Exxon Neftegas Limited, the Sakhalin Oblast Administration and the Ministry of Economic Development and Trade of the Russian Federation have established a Joint Committee on Russian Content.

Infrastructure development

In partnership with the Sakhalin Oblast, Khabarovsk Krai and district administrations, the Sakhalin-1 Consortium provides significant community investments. We are actively involved in improving public infrastructure such as hospitals, roads, bridges and airport to support Sakhalin-1 hydrocarbon operations which also benefits the community.

When implementing community investment programs, we seek to find the best balance between the needs of the local population and the project's operational requirements.

  • Over US$ 230 million of Sakhalin and Khabarovsk Krai infrastructure improvements which benefit local communities, including hospitals and clinics, roads, bridges, harbors, airports, and power and water facilities. Examples: construction of Yuzhno Women’s Clinic; repair and upgrade of Yuzhno-Okha federal road and bridges; upgrade of Nogliki Airport

For example, we invested in the Nogliki airport extensive upgrade project to build new terminals, install modern all-weather navigational equipment and pave runway. The airport supports Sakhalin-1 aviation operations

Another significant community investment project was to restart construction of the Yuzhno-Sakhalinsk Women’s Clinic. The clinic’s construction began in the late 1980s but was suspended in 1989 due to lack of financing. Work resumed 17 years later after the Sakhalin-1 Consortium invested $3 million

Community Contributions

  • Over US $34 million of charitable contributions provided to local community organizations
  • Sakhalin-1 charitable contributions include education, health, youth, and arts and civic projects, such as:  support of Okha Children Art Festival, annual Teacher of the Year contest; new medical equipment for Sakhalin Children’s Hospital; music educational program by Sakhalin Chamber Orchestra; summer camp for children of indigenous native peoples
  • ENL has actively supported local economic development projects with a particular focus on enhancing the lives of indigenous native peoples and at preservation of indigenous culture, traditions and languages: publishing books in native languages, support of national ensembles and dance groups, promotion of national applied art by arranging exhibitions and ethnical expositions, holding workshops/ seminars on national crafts, supporting traditional IMPN holidays and national art festivals
  • In December 2012, Sakhalin Oblast Government and Sakhalin State University with Sakhalin-1 Consortium cooperatively established a new Oil and Gas Technical Institute (College) in Yuzhno-Sakhalinsk. This cooperation continued with the Sakhalin technical math and science center (STEM-center) creation targeted at cross-disciplinary liaison between Sakhalin State University’s departments. About US$ 15, 4 mln have been provided to support this major educational project
  • As a part of the Signature contribution program, US$ 7.3 mln have been provided to local healthcare institutions, primarily to Sakhalin children hospital and Sakhalin oncological center, to purchase innovative medical equipment thus improving local medical care

Small Business Support

  • In 2004-2009 the Sakhalin-1 Consortium provided US$1.5 mln to implement a program targeted at small businesses support in Sakhalin Oblast and Khabarovsk Krai

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