State-controlled Russian oil producer Rosneft has awarded international oilfield services provider Schlumberger a contract to drill two exploration wells off Sakhalin Island at its shallow-water East Pribrezhny block, writes Vladimir Afanasiev.

According to Rosneft, Schlumberger has been selected to complete two extended reach wells from shore at an agreed price of over 1.14 billion roubles ($17 million), beating an alternative proposal from US giant Halliburton at 1.18 billion roubles.

Rosneft announced the tender last June and originally expected to make the award during the third quarter of 2018. However, it had to extend deadlines as talks with the two potential contractors progressed.

Company executives have been quoted as saying that the assignment does not fall under terms of US sanctions against Russia and Rosneft itself, introduced in 2014 in response to the Russian annexation of the Crimea Peninsula from Ukraine.

Drilling into the block will be carried out from shore — sanctions prohibit US companies from providing offshore drilling rigs and services for Russian offshore projects located in water depths of 500 feet or more.

Despite the delay in making the award, the company still expects the two wells to be completed and flow tested between March and August.

The East Pribrezhny block lies in Nabilsky Bay in the north-west of Sakhalin Island, next to the Rosneft-operated Katangli onshore field.

Rosneft obtained an exploration and development licence for the block in 2013. The acreage is estimated to contain in-place resources of about 360 million barrels of oil and some 7 billion cubic metres of gas.