Sakhalin-1 Ready to Reach Maximum Oil Output After ExxonMobil Departs

New Delhi: After being forced to replace Exxon Mobil Corp (XOM.N) due to sanctions, Russia's Sakhalin-1 oil production has finally been restored to its maximum capacity of 220,000 barrels per day (bpd). According to an industry source with knowledge of the project, output had initially reached a high of 140,000-150,000 bpd - around 65% of its original output level. However, progress is being made on the project and it is expected that full recovery will be achieved soon.

Following the imposition of sanctions, which was a direct response to Moscow's intervention in Ukraine, Exxon Mobil Corp (XOM.N) withdrew from the Sakhalin-1 project, issuing a force majeure and thereby bringing production to a halt. However, thanks to ongoing efforts, Russian authorities have been able to restore the project's output level up to 65% of its original capacity and are optimistic that they will soon be able to reach full operation levels once again.

According to an anonymous industry source, the Sakhalin-1 project is nearing full capacity with output levels expected to reach their peak of 200,000-220,000 bpd within 3-4 weeks. The source chose not to disclose their identity due to a lack of authorization to speak on behalf of the media.

Following the decision of Exxon Mobil Corp (XOM.N) to withdraw from the Sakhalin-1 project and a subsequent issuing of a force majeure, Russian authorities created an entity owned by Rosneft subsidiary to take over investor's rights in the project. This move was made upon approval of requests from India's ONGC Videsh and SODECO, respectively holding a 20% and 30% stake in the project.

A new entity created by Rosneft's subsidiary and in which Indian and Japanese partners have a share was reported to have questioned its partners on possible methods of managing the Sakhalin-1 project effectively. Moreover, it has been suggested that Oil and Natural Gas Corp (ONGC) will not be receiving any parcel of Sokol crude from Sakhalin-1 within this fiscal year, with no response yet from Rosneft following their inquiry.