Two foreign-led offshore oil and gas developments near Sakhalin Island in Russia’s far east — Sakhalin 1 and Sakhalin 2 — have recorded falling oil production in the first half of May after supermajors ExxonMobil and Shell announced their exit from the country.
Moscow-based news agency Interfax quoted an unnamed governmental source as saying that Sakhalin 1 operator Exxon Neftegaz reported an almost three-fold drop in oil output to just over 60,000 barrels per day between 1 and 15 May, compared with the April average.
Oil production at the Gazprom-led Sakhalin 2 project, where Shell is the second largest shareholder, reportedly fell by 2% to about 81,000 bpd in the first half of this month, compared with April.
Official oil and gas data has been lacking in Russia since the invasion of Ukraine as the country’s Energy Ministry has stopped providing updates on either production or exports, citing unspecified technical issues.
The Europen Union, along with the US and other nations, have approved several rounds of sanctions against Russia and its corporations since the invasion started in February.
In April, Exxon Neftegaz reportedly declared force majeure circumstances on oil shipments to international markets due to difficulties in chartering tankers to offload from Russia’s De-Kastri marine export terminal, which is located in the Khabarovsk region opposite Sakhalin island.
Shipowners are reportedly concerned about the consequences of sending their vessels to the region and having issues with arranging insurance coverage.
In contrast, shipments of liquefied natural gas from the Prigorodnoye terminal on the southern shores of Sakhalin Island are understood to be running normally to meet demand from Japanese customers.
“If Japan withdraws from the [Sakhalin 2] project and the concessions are then acquired by Russia or a third country, it could further boost resource prices and benefit Russia, which will not amount to effective sanctions,” Japan’s Minister of Economy, Industry & Trade Koichi Hagiuda was quoted as saying by Reuters.
According to the latest available data from Russia's Energy Ministry, Sakhalin 1 produced at the average rate of 173,000 bpd in January and February, down from an average 227,000 bpd in 2021.
Sakhalin 2’s oil output was reported at 85,000 bpd in the first two months of this year against 81,000 bpd in 2021.
Despite the decline in oil exports from the two Sakhalin developments, independent observers quoted by Moscow-based industry monthly InfoTEK, suggested that growth of Russian oil export shipments actually increased from its main sea ports in March and April.
Against February, oil shipments by major state controlled and privately held producers in Russia from the country’s ports of Novorossiysk, Primorsk, Ust-Luga and Kozmino rose by 14% to 2.39 million bpd in March and by another 13% to 2.75 million bpd in April.
Buyers from India and Asia have been reportedly attracted by unprecedented discounts for Russian barrels against international oil benchmarks, making them attractive despite perceived sanctions risks.
With Russian oil export shipments apparently on the rise despite Western efforts to limit them, state pipeline operator Transneft was reported this week to have started to classify a schedule of off-loadings from four ports.