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Sakhalin-1 Project

Fact Sheet
November 2010


The Sakhalin-1 Project is one of the largest single international direct investments in Russia and an
excellent example of advanced technological solutions and project management skills being utilized to
meet growing worldwide energy demand. Over its years of production operations, the multi-billion
dollar project has exhibited exemplary operational, environmental, and safety performance, and has
provided multi-faceted benefits to Russia and its citizens.

Exxon Neftegas Limited, an affiliate of Exxon Mobil Corporation, is operator of the Sakhalin-1 Project.
The project is being implemented by an international consortium comprised of state-owned Russian
oil company Rosneft acting via its affiliates RN-Astra (8.5%) and Sakhalinmorneftegas-Shelf (11.5%);
the Japanese consortium SODECO (30%); Indian state-owned oil company ONGC Videsh Ltd.
(20%); ExxonMobil (30%).

Sakhalin-1 includes three oil and gas fields--Chayvo, Odoptu, and Arkutun Dagi--located off the
northeast coast of Sakhalin Island in the Russian Far East. Potential recoverable resources are 307
million tons (2.3 billion barrels) of oil and 485 billion cubic meters (17.1 trillion cubic feet) of gas of
natural gas.

The Sakhalin-1 Project is being executed in phases. The first phase developed the Chayvo field over
a five year span. Initial oil and natural gas production from Chayvo started ahead of schedule in
October 2005 using interim production facilities. With the startup of the project’s De-Kastri oil export
facility in September 2006 and Onshore Production Facility (OPF) in October 2006, the project
reached targeted peak oil production rates of 250,000 barrels (33,000 tons) per day in February 2007.

Drilling operations at the Odoptu field, which highlight the start of the next phase of the Sakhalin-1
Project, began in May 2009. The field was put into production in September 2010. Production from
the field is transported to the Chayvo OPF via an 80 kilometer flowline.

Future project phases call for the development of the Arkutun-Dagi field as well as expanded gas
production and sales from the Chayvo field. These later project developments are expected to
sustain production until 2050.

Project Highlights

• Project started oil and gas production on-time and quickly achieved planned production levels.
• State-of-the-art technologies and management processes have been utilized to maximize
production, while maintaining the highest levels of safety, environmental, and operational
• As of November 2010, over 284 million barrels (approx. 37.4 million tons) of oil produced to date
to meet world energy demands; and more than 227 billion cubic feet (6.5 billion cubic meters) of
natural gas has been delivered to customers in the Russian Far East.
• Over US$7.7 billion in contracts awarded to Russian companies or joint ventures (two thirds of
the total).
• More than 550 Russian nationals are currently employed directly by ENL.
• During the life of the project, over US$70 billion in taxes, royalty payments, and the state’s share
of oil and gas is anticipated to be paid to the Russian state.
• Since the project startup, over US$3.9 billion in royalties, including the state’s share of oil and gas
and taxes, has been provided to the Russian Federation which includes more than US$1.35
billion provided to the Sakhalin Oblast.
• US$150 million of Sakhalin infrastructure improvements which benefit local communities,
including hospitals and clinics, roads, bridges, harbors, airports, and power and water facilities.
Approx. US$4.5 million in additional charitable contributions to local schools, medical, and civic

Sakhalin-1 Phase 1 Overview

The Chayvo field was initially developed with both onshore (Yastreb) and offshore (Orlan) drilling
facilities. In July 2008 dismantling of the Yastreb rig was commenced upon completion of its

operations there and the rig was moved to the Odoptu field where it is now in use. Currently, the
Orlan is in operation at Chayvo. The produced oil and gas is transported to the OPF where it is
processed and stabilized for further shipment. The oil is transported by a 226 kilometer (140 mile)
pipeline across Sakhalin Island and under the Tartar Strait to the Khabarovsk Krai on the Russian
mainland where it is temporarily stored at the De-Kastri export terminal. From this terminal the oil is
transported by an approximately six kilometer undersea pipeline to the world’s largest Single Point
Mooring (SPM) tanker loading facility. From the SPM the oil is loaded onto specially designed
double-hulled tankers for distribution to the global market. Natural gas is transported a short distance
from the OPF where it connects with a network of pipelines owned and operated by other companies
for sale to customers in the Russian Far East.

Sakhalin-1 Facilities

Drilling Facilities:

The Yastreb land rig was engineered exclusively for Sakhalin-1 and is the most powerful land rig in
the industry. It is designed to drill extended reach wells to offshore targets from land-based locations.
State-of-the-art Extended Reach Drilling (ERD) technology reduced the high capital and operating
costs of large offshore structures and at the same time minimized the environmental impact in this
sensitive near-shore area. In June 2003, ENL initiated the shore-based ERD program to install wells
under the seabed at distances exceeding 11 kilometers to tap the northwestern flank of the main
Chayvo oil zone. Drilling at Chayvo was completed with a total of 20 ERD wells drilled, setting records
in depth, horizontal reach and drilling speed. The Yastreb rig was dismantled, modified and
transported to Odoptu field where it has been in operation since the startup of drilling in May 2009.

Oil and gas is also produced from the Orlan offshore platform. The 20-well concrete structure is being
used to develop the southwestern flank of the main Chayvo zone. Installation of the Orlan platform
was completed in July 2005 and drilling operations commenced in December 2005. Offshore
processing facilities are minimal, with a full well stream sent to shore for further processing at the
Chayvo OPF. Drilling operations on the Orlan platform were completed with a total of 21 ERD wells
drilled. Most of the Orlan wells are in the 5.5 kilometer range, with the longest well drilled measuring
7.5 kilometers long.

The Odoptu field is located over nine kilometers offshore northeast Sakhalin Island near Piltun Bay
and is being developed from the Yastreb drilling rig which was relocated from the Chayvo field. The
Odoptu field began production in September 2010. In June 2010, the field’s OP-9 well was completed
at a total measured depth of 11.036 meters – at that time making it the longest well drilled at Odoptu
and the fifth longest reach well in the world. As of November 2010, a total of seven production wells

have been completed at the site. Production from Odoptu is transported via a new 80 kilometer long
flowline to the existing Chayvo Onshore Processing Facility.

Processing Facilities:

Production from the Chayvo and Odoptu fields is transported to the Chayvo OPF, which is designed
to produce at the rate of approximately 34,000 metric tons (250,000 barrels) of oil and 22.4 million
cubic meters (800 million cubic feet) of gas per day. The OPF produces stabilized crude oil which is
shipped to the De-Kastri terminal for export, and natural gas which is either supplied to the Russian
Far East or injected back into the Chayvo field to maintain reservoir pressure.

Crude Oil Export System—pipeline, terminal, tanker loading facilities

The project crude oil export system was commissioned in August 2006. Construction was completed
on a 24-inch, 226 kilometer (140 mile) pipeline to transport crude from the OPF across Sakhalin
Island and the Tatar Strait to the newly-constructed De-Kastri terminal in the Khabarovsk Krai. Tanker
loading operations began at De-Kastri in September 2006.

The De-Kastri terminal provides storage and a SPM tanker loading facility that can accommodate
year-round crude oil export to world markets. The terminal includes two 100,000 cubic meters
(650,000 barrel) capacity storage tanks to hold the Sakhalin-1 crude oil prior to tanker transfer and
shipment. Because of its remote location, the terminal is essentially self-sufficient. It has its own
electrical power generation, water supply, waste management system and living quarters for the
operating staff. The crude is exported via a subsea loading line to the SPM facility, which is located
5.7 kilometers east of the Klykov Peninsula in Chikhacheva Bay.

A dedicated fleet of double-hulled Aframax-class tankers carrying up to 100,000 tons (720,000

barrels) of crude is used for year-round export of crude oil from the De-Kastri terminal to world
markets which includes Japan, South Korea, USA, Australia, New Zealand and other countries in
Southeast Asia. The Sakhalin-1 Consortium members market their share of the crude individually.

Future Project Phases


The Arkutun-Dagi oil and gas field is located approximately 25 kilometers off the northeast coast of
Sakhalin and to the east of the Chayvo field. The project plans call for the field to be developed from a
new drilling and production platform consisting of a gravity-based structure and topsides, which are
expected to be the biggest in the industry. Arkutun-Dagi’s gravity-based structure is being constructed
in a Russian Far East dry dock in Nakhodka. Oil and gas will be transported via a new flowline to the
existing Chayvo Onshore Processing Facility and after that via existing pipelines for sale. The
Arkutun-Dagi field is anticipated to begin producing in 2014. The peak production rate at the field is
estimated at 4.5 million tons of oil per year.

Phase 2 Chayvo Natural Gas Development

Future project plans call for the expanded development of Chayvo natural gas resources that are not
associated with current oil production. These development plans will require the drilling of additional
gas wells and the expansion of existing onshore and offshore facilities. This project would allow for
expanded gas sales to domestic and export markets.