News & Media releases
Russia's first offshore concrete gravity platform begins journey to Sakhalin
15/06/2005
In a unique event for Russia, the concrete gravity base substructure (CGBS) for the Sakhalin II Phase 2 Project's Lunskoye A platform began its epic journey to Sakhalin, when it was towed out of the dry dock in Nakhodka near Vladivostok, Sakhalin Energy announced today.
The first of its kind to be built in Russia, the concrete platform will now be towed by three ocean going tugs to the installation site on the Lunskoye Field, offshore north east Sakhalin. The journey is expected to take some 16 days, subject to weather, and will cover a distance of 1765 kilometres.
The Lunskoye CGBS and its sister CGBS for the new Piltun Astokhskoye offshore platform (PA-B), which will be installed on the Piltun feature of the PA field later this year, are amongst the largest concrete structures ever built in Russia. The construction of the structures required a workforce of some 2,000 Russian nationals, and involved extensive use Russian industry, labour and materials.
Sakhalin Energy Deputy Chief Executive Officer and Project Director David Greer said: "The unique shape and complex geometry of the Lunskoye-A and Piltun-B concrete structures and the need for them to withstand the harsh climate and ice conditions offshore Sakhalin places them amongst the most complex concrete construction projects ever undertaken anywhere in the world.
"It is a pioneering achievement for Russia and a great tribute to all the men and women who helped design and build them in record time. Their effort and contribution towards the success of the Phase 2 Project will never be forgotten."
Norwegian design and engineering experts Aker Kvaerner - who have unparalleled experience in such concrete structures - and Finnish construction experts Quattro Gemini, worked with more than 250 Russian companies and suppliers to complete the structures. Russian companies from Nakhodka, Primorsky Krai and other parts of Russia - including Amurmetal, Komplex, Astrakhan Korabel, Dalgidrostroy, Daltekhflot, Massis, NSRZ and Zvezda - played a major part in the construction work and supply of materials for the CGBS.
Some 6 million Russian manhours, and 97 percent of the materials were purchased in Russia. Russian nationals accounted for more than 92 percent of the construction workforce of engineers, workers and other staff.
The Lunskoye CGBS consists of a caisson base and four cylindrical (truncated cones topped by cylinders) legs that support the topsides of the new offshore platform. It has a total weight of 103,000 tonnes. The base is 105 metres by 88 metres and 13.5 metres high. The diameter of each leg measures more than 20 metres at the base and they are some 56 metres high. Total height of the entire structure is 69.5 metres.
The Lunskoye CGBS will be located 15 kilometres off the north-eastern coast of Sakhalin Island, in a water depth of 48 metres. The platform will support drilling facilities, accommodation and minimum processing facilities. It will have the capacity to produce 51 million cubic meters of gas per day (1,800 million standard cubic feet per day), and approximately 50,000 barrels of condensate per day (8,000 cubic meters per day).
Separation, including treatment and separation of the Lunskoye gas and condensate will be undertaken onshore at an Onshore Processing Facility, which will also supply power to the platform via submarine cable.
The Lunskoye platform will produce the majority of the gas for Sakhalin Energy's Liquefied Natural Gas (LNG) plant, which is currently under construction on schedule in the south of island.
Notes for editors
Sakhalin Energy Investment Company Ltd. is an incorporated company, established in April 1994 and based in Yuzhno-Sakhalinsk, Russia for the purpose of the implementation of and development of the Sakhalin II integrated oil and gas project. The shareholders in Sakhalin Energy are: Shell Sakhalin Holdings B.V. with 55 % interest (parent company - Royal Dutch/Shell Group of Companies), Mitsui Sakhalin Holdings B.V. with 25% (parent company - Mitsui & Co., Ltd.) and Diamond Gas Sakhalin B.V. with 20 % (parent company - Mitsubishi Corporation).
The Sakhalin II development represents the largest foreign direct investment project underway in Russia. It was the first Production Sharing Agreement (PSA) to be signed in Russia and the first PSA to go into operation.
Phase 1 has been producing oil from the Vityaz Complex offshore Sakhalin since July 1999. The Vityaz complex consists of the Molikpaq production platform, a single anchor leg mooring buoy and the Okha floating storage and offloading unit, and is located on the Astokh feature of the Piltun Astokhskoye (PA) reservoir offshore Sakhalin. The Molikpaq is the first offshore oil production platform in the Russian Federation.
Production is currently limited to the ice-free period during the summer months. Production during the 2004 season amounted to 11.6 million barrels. Sakhalin Energy has sold its crude oil to refineries in seven different major markets - Japan, Korea, China, Taiwan, the Philippines, Thailand and the USA.
Phase 2 of the Sakhalin II Project is thought to be the biggest single integrated oil and gas project ever undertaken. It entails the further development of the PA field - an oil reservoir with associated gas - and the development of the Lunskoye field - a gas reservoir with associated condensate. Apart from the Lunskoye platform, the project also calls for a further oil and gas production platform on the PA field and a 9.6 million tonne per annum LNG plant. The topsides for the Lunskoye platform and the new PA-B platform are currently under construction in Korea.
An onshore processing facility is being built to separate gas and condensate from the Lunskoye field. Pipelines will transport the oil and gas more than 800 km to an oil export terminal and the LNG plant at Prigorodnoye on the southern end of Sakhalin Island, which remains largely ice-free year round. The Phase 2 Project will also enable year-round production from the Molikpaq platform.
Year-round oil production is expected in 2006, and deliveries from the new LNG plant are planned to commence end 2007.
The Royal Dutch/Shell Group of Companies, "the Group", is a diverse group of energy companies with operations in around 140 countries. The Group's businesses include oil and gas exploration and production; power generation; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects including wind and solar power. The Group's parent companies are Royal Dutch Petroleum Company which has a 60% interest in the Group and The "Shell" Transport and Trading Company plc which has a 40% interest in the Group. Shares in the parent companies are traded on stock exchanges in Europe and the US. On 28 October 2004 Royal Dutch Petroleum and Shell Transport and Trading announced proposals for their unification under a single company, Royal Dutch Shell plc, with one Board of Directors. For further information, visit http://www.shell.com.
Disclaimer statement
This announcement contains forward-looking statements, that are subject to risk factors associated with the oil, gas, power, chemicals and renewables business. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results, trends or reserves replacement to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risk, risks associated with the identification of suitable potential acquisition properties and targets and the successful negotiation and consummation of transactions, the risk of doing business in developing countries, legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.
Please refer to the Annual Report on Form 20-F for the year ended December 31, 2004 for a description of certain important factors, risks and uncertainties that may affect the Companies' businesses. Neither of the Companies undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise.
Cautionary Note to US Investors:
The United States Securities and Exchange Commission ('SEC') permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as "expected producible resources" and "amount of reserves we expect to produce", that the SEC's guidelines strictly prohibit us from including in filings with the SEC.