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Exxon-led project in Russia to cost 19.3 billion dollars
AFP
MOSCOW
Petroleumworld.com 12 15 06Russia has given the go-ahead to increased spending for the Sakhalin-1 oil and gas project led by US oil giant ExxonMobil to a total of to 19.3 billion dollars (14.7 billion euros), the Russian energy ministry said on Thursday.
The original budget was for 12.8 billion dollars but extra costs amounted to 6.5 billion dollars because of work on the Chayvo reserves in the northeastern part of the island of Sakhalin in far eastern Russia, the ministry said.
The private consortium operating the project in far eastern Russia must consult with the Russian government about project budgets under terms of a production sharing agreement (PSA) that governs the project.
The Russian state only receives a share of profits from the project once the participating companies, which include Russian, Chinese and Indian energy firms, have recouped their investment.
"The work programme and the estimate of the expenses for extraction and management of December 2006 has been approved," the ministry said in a statement.
Sakhalin-2, another project on the island that is operated by Anglo-Dutch energy giant Shell, ran into trouble with the Russian government when it increased budget costs from 10 to 20 billion dollars in 2005.
Sakhalin-2 also operates under a PSA with the Russian state.
AFP 14 1715 GMT 12 06
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