Sakhalin-I set to begin next month

India will start reaping the benefits of its largest investment overseas - gas production from the Russian oil and gas field Sakhalin-I will start next month.

ONGC Videsh, the overseas arm of Oil and Natural Gas Corporation, holds 20 per cent stake in the field. US-based ExxonMobil, with a 30 per cent stake, operates the project, while Russia's Rosneft and Japan's SODECO hold 20 and 30 per cent stakes, respectively.

OVL has invested about $2 billion in the field. Petroleum and Natural Gas Minister Mani Shankar Aiyar will leave for Russia next week to mark the beginning of production.

The project will initially produce 1 billion cubic metre of gas a year.

Though the consortium will sell gas and oil in the Russian market, there were plans of bringing gas to India through a swap arrangement at a later stage.

India may swap its share of oil and gas with Japan, Korea or China since transporting gas directly from Russia may not be cost effective.

OVL executives said the company was also examining options like monetising its share of oil and gas. In swap deals materialise, ONGC plans to target Far East countries like Korea, China and Japan. However, price will be a crucial factor, since crude from Sakhalin was expected to be sweet which has higher value.

Oil production from the field will start early next year. The field is expected to produce 23,000 barrels per day, which will increase to 250,000 barrels by December next year.

Sakhalin-I involves the development of Arkutun-Dagi, Odoptu and Chaivo fields off Sakhalin north coast. Estimated recoverable reserves at the fields are about 307 million tonnes of oil and 485 billion cubic meters natural gas.