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. Last Updated: 07/27/2016

Sakhalin-2 Exports Set for Delays

Sakhalin-2 energy group confirmed on Tuesday that it would delay year-round exports of crude to 2008 from the end of 2007 but was sticking to its liquefied natural gas deliveries timetable.

The delay will mean lower-than-expected winter supplies of a highly sought light crude to a tight oil market worried about peak heating season demand and already facing record prices.

"Year-round exports of crude will start in the first half of 2008. As for the LNG deliveries, we plan to send the first cargoes in the second half of 2008," said a spokeswoman for Sakhalin Energy, the consortium developing Sakhalin-2.

Industry sources said last week that exports of Vityaz crude would be pushed back to next year due to delays in pipeline commissioning. Sakhalin Energy then said it was sticking to its schedule to launch the pipeline by the end of this year.

Last year, the project faced intense scrutiny from technical and environmental agencies, and the pressure contributed to a decision by Shell, then leading the project, to cede control to Gazprom.

Shell's share halved to 27.5 percent after Gazprom bought a 50 percent stake from Shell and its Japanese partners, Mitsui and Mitsubishi.

Analysts interpreted the sale as yet another step in the Kremlin's drive to win more control over the country's huge energy industry.

Sakhalin-2 produces 60,000 to 70,000 barrels per day of Vityaz crude, with API gravity of 34.3, for only about six months of the year because drifting ice stops production and closes the loading port. Production is expected to gradually increase from next year and reach 150,000 bpd by 2010 to 2011.