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Rosneft sues Exxon, others over Sakhalin oil project

Rosneft is suing 5 of its partners in the Sakhalin-1 oil project for US$1.4 billion (89 billion rubles).

Rosneft sues Exxon, others over Sakhalin oil project

Moscow, July 25 - Neftegaz.RU. Russia’s Rosneft is suing 5 of its partners in the Sakhalin-1 oil project for $1.4 billion (89 billion rubles), including Exxon, Indian ONGC Videsh, Japanese Itochu and Marubeni, and Japan’s economy ministry, Nikkei Asian Review reports, noting that the lawsuit could strain bilateral relations between Russia and Japan.

Rosneft has accused its partners - which also include two of its own subsidiaries - of «unjust enrichment and interest gained by using other people's money,» a statement submitted to an arbitration court in the Sakhalin region revealed.

According to Rosneft, the consortium operating Sakhalin-1 pumped oil from a Rosneft-operated deposit that is adjacent to the Sakhalin-1 development. This is the Northern Chaivo field, with reserves estimated at more than 15 million tons of crude and some 13 billion cu m of natural gas. The rest of the Chaivo field is part of the Sakhalin-1 project, RBC reports.

The Russian state energy giant is seeking $430 million (26.7 billion rubles) each from the local subsidiary of Exxon, which is the operator of the project, and Sodeco, the consortium of Japanese companies that owns a 30-% stake in Sakhalin-1. Another $280 million ($17.82 billion rubles) each is being sought from the Indian company and its two subsidiaries. ONGC Videsh and the Rosneft subsidiaries hold 20 % stakes in the project.

A source quoted by RBC said Rosneft had been in talks with the Sakhalin-1 partners regarding the issue, but had failed to reach an agreement. Exxon has denied any wrongdoing and will appeal the lawsuit. Rosneft, for its part, told media this was a «technical issue» that the company was unwilling to comment on.

Sakhalin-1 has been operating since 2005, and as of last year produced around 200,000 bpd of crude. Together with other Russian fields, it provides 6 % of Japan’s crude oil imports. Some industry analysts believe the lawsuit is an attempt by Rosneft to secure additional funding amid Western sanctions that have reduced its access to international lenders.

Author: Irina Slav

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