BP Closes Sakhalin Office

This should not come as much of a surprise to anyone who’s been paying attention:

UK supermajor BP will close its office in Sakhalin island after it decided to scrap further drilling at Sakhalin 4 and Sakhalin 5, BP’s Moscow office said today.

BP said its joint venture with Russia’s largest oil producer Rosneft, Elvari NefteGaz, will only carry out geological exploration at Sakhalin 4 and Sakhalin 5, where drilling has so far not been seen as successful.

It had been rumoured around the island that BP’s exploration activities had not bourne fruit, but it is hard to believe that this is all there is to the picture.  The Sakhalin 4 and 5 developments are in the far north of the island in deep water which is mostly frozen.  To develop the fields would have required extremely complex engineering and enormous investment, with artificial islands having to be constructed in places.

Having seen Shell being forced to hand over control of the Sakhalin II project, Exxon being told it is not allowed to export the gas from the Sakhalin I project, and its own major stake in the Kovytka field transferred to the Russian government, it is probably unlikely that BP’s shareholders have much stomach for pouring billions of dollars into Russia.

Summer 2007 could prove significant yet.


4 thoughts on “BP Closes Sakhalin Office

  1. Pingback: Global Voices Online » Russia: BP Closes Sakhalin Office

  2. Hey White -Son
    That doesn’t surprize me in the least. Last nights news coverage of so-called power hand over left me laughing. Putin will still be the man, corruption will always run the country. Too bad as I did met some people who are really trying there best to succeed in a country that gives no brakes.
    off the subject have tried numerous times to get in touch with you through your contact me,,,,but always comes back.
    Cheers Canadian Pirates Rule

  3. Good riddance, I rooted for twenty years that the contrary blockheads might get a clue and redirect their energies toward economic competition. They must be missing a dna strand or a gene somewhere. They have the raw materials, the population, and the technology, but not the will. They are like the worker who accuses the boss of shorting their wages because they never learned to count. Ironically communism energized the dragon to engage the world in productive capability, but the bear slips back towards barbarism and defending their failures as free men. They seem doomed to be at best number two behind the US as the worlds arms provider. TGF the AK-47 and MIG or we should remember them for cheap vodka and queing up in empty stores with worthless rubles in their hands. And the Chinese are purchasing GM!

  4. Pingback: White Sun of the Desert » The BP-Rosneft Exploration Pact

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