Sakhalin Energy — 20 Years of “Firsts” as Russia’s Pioneer in Offshore and LNG

By Pat Davis Szymczak, May 5, 2014

It has been 20 years since Sakhalin Energy initiated Russia’s first foray into offshore oil and gas production. Since its stakeholders signed the Sakhalin-2 production sharing agreement (PSA) to develop the Piltun-Astokhskoye and Lunskoye oil and gas fields in 1994, there have been many other firsts as well : Russia’s first LNG plant, the country’s first long-term contracts for LNG sales, Russia’s first steps as a hydrocarbon supplier to Asia-Pacific markets and much more. In terms of technology, Sakhalin Energy has pioneered the use of world-class seismic, drilling, project management techniques and rig and topside construction never before seen in Russia or, in some cases, the world. Recently, Roman Dashkov, CEO of Sakhalin Energy, spoke with Oil&Gas Eurasia about some of the milestones Sakhalin Energy has set over the last two decades, and shared his vision of the company moving forward.

Oil&Gas Eurasia : Looking back at Sakhalin Energy’s 20-year history, which of the company’s achievements would you highlight as key milestones in technology, project management and LNG marketing?

Roman Dashkov : Speaking about milestones, the starting point for offshore developments in Russia was the June 1994 Agreement on the Development of Piltun-Astokhskoye and Lunskoye Oil and Gas Fields on the Basis of Production Sharing, known as the “Sakhalin-2 PSA”. This first production sharing agreement (PSA) in Russia laid the basis for Sakhalin-2, one of the world's largest integrated oil and gas projects.

Our next milestone was the first commercial oil we produced from our ice-class oil platform Molikpaq (PA-A) installed as Sakhalin-2 Phase 1. This was also in some sense a breakthrough, as Molikpaq was the first offshore platform in Russia. Those first years of Molikpaq operations gave us the much-needed experience in managing hydrocarbon production under subarctic conditions.

Another landmark achievement – during Sakhalin-2 Phase 2 – was the construction of new production, transportation and processing infrastructure in a remote region with a severe climate. Sakhalin Energy set itself a unique task of building concurrently quite a few oil and gas facilities, including offshore and onshore pipelines, two new platforms, an onshore processing facility (OPF), an LNG plant, booster stations, pipeline maintenance depots, etc. The oil and gas components of this infrastructure were designed and constructed within one integrated project schedule. Many innovations for both Russian and global oil and gas industries were first used in our project, with some state-of-the-art solutions first tested and employed by the company and then successfully utilized by other projects. The giant infrastructure of Sakhalin-2 was designed and built in its entirety within a mere seven years: Sakhalin-2 Phase 2 was launched in 2003, the Lun-A and PA-B platforms installed, respectively, in 2006 and 2007, year-round oil shipments commenced in 2008 and LNG plant operations started in early 2009. A year after its inauguration, the LNG plant was already producing at its rated capacity, which it exceeded shortly afterwards. Today, we are producing annually over 10 million tons of LNG, i.e. above 4 percent of global LNG production. 

A real breakthrough in