India receives 1st cargo of Sakhalin oil

Mangalore: The first shipment of crude oil from the Sakhalin oil fields in Russia was received on Saturday by Minister of Petroleum and Natural Gas Murali Deora.

The consignment of 92,055 tonnes (672,000 barrels) of Sokol crude oil sailed from Dekastri port in Russia November 14 on board M K Viktortinov, the oil tanker of Primorsk Shipping Co, and reached the New Mangalore Port Trust on Friday.

The crude oil will be processed at the Mangalore Refinery and Petrochemical Ltd (MRPL) facility here, which is a subsidiary of Oil and Natural Gas Corporation Ltd (ONGC).

Russian Ambassador to India Vyacheslav Ivanovich Trubnikov, Administrative Reforms Commission chairman Veerappa Moily and top officials of ONGC and its sister concern ONGC Videsh Ltd (OVL) were present on the occasion.

OVL had taken 20 per cent equity stake in Sakhlain-1 project at $1.7 billion in 2001 from the two subsidiaries of Russian state-owned oil firm Rosneft - SMNG-S and Rsoneft-S. Subsequently, OVL invested $2.5 billion in the project.

The Sakhalin-1 project consists of three offshore fields - Chayvo, Odoptu and Arkutun-Dagi off the northeast coast of Sakhalin Island in Russian Far East.

Receiving the cargo, Deora said the shipment signalled the opening of a new Silk Route between Russia and India, spanning 5,700 nautical miles.

"As the largest owner and producer of oil and gas reserves, Russia will be playing a major role in balancing the energy axis in the globe. The multi-polar energy supply chain, which Russia is capable of creating, will help us to diversify our resources," Deora said.

Deora also hinted India would participate in the bidding for a strategic stake in the Sakhalin-3 project.

"We have faith in Russia's ability to maintain and expand its capacity to produce and export energy even in difficult times. We look forward to partner with Russia in these endeavours," Deora stated.

OVL managing director R S Butola said the second cargo of crude oil amounting to 100,000 tonnes would reach the Mangalore port by this month-end.

"As an integrated project, Sakhalin-1 is being executed in phases. In the first phase, the Chayva field was developed and production commenced from Oct 2005. The initial output of 50,000 barrels per day was sold to domestic consumers in Russia," Butola pointed out.

Natural gas production averaging 60 million cubic feet (1.7 million cubic metres) per day is also being marketed to Russian customers.

Sakhalin-1 is due to pump 250,000 barrels per day (bpd) by the end of this or early next year.

"In the second and third phases, development of Chayvo gas reserves for export and that of Odoptu and Arkutun-Dagi fields will be taken up," Butola added.

Butola also said on Saturday that ONGC plans to plough back revenues from Sokol crude sales for the development of the Sakhalin-1 oil field.

India imports more than 70 per cent of the oil it consumes, and its state-run firms are investing heavily in overseas oil assets to get a steady supply.

We are making more investment out of our revenues to produce more oil from Sakhalin-1 oil fields," said Butola.