The Deadline for Selling the Unclaimed Share of Foreigners in Sakhalin-1 Has Been Extended Until the End of the Year
The deadline for selling the unclaimed share of foreign partners in the new operator of the Sakhalin 1 project has been extended until the end of 2024.
On April 8, Russian President Vladimir Putin signed a decree amending Decree No. 723 of October 7, 2022, according to which the deadline for the sale of a stake in the project was changed to “no later than January 1, 2025.” The document is posted on the official Internet portal of legal information.
Previously, this deadline was set until October 2023.
As reported, according to the October 2022 decree, the project operator was replaced with the American Exxon Neftegas Ltd. (who managed to completely stop production at the project by October) to a Russian LLC. The new operator, Sakhalin-1 LLC, is registered in Yuzhno-Sakhalinsk, and the sole executive body is Sakhalinmorneftegaz-Shelf JSC.
Sakhalinmorneftegaz-Shelf is entitled to 11.5% in the new LLC (proportional to the share in the PSA). Another 8.5% is managed by JSC RN-Astra. Foreign participants in the PSA had to confirm their consent to receive a proportional share in the new operator within a month. This was done by the Japanese SODECO (30%) and the Indian ONGC (20%). In turn, Exxon Mobil (30%) announced the termination of participation in the PSA project and its complete withdrawal from Russia.
In accordance with the presidential decree, the “relinquished” share is subject to assessment and subsequent sale to a Russian legal entity that meets the criteria determined by the government of the Russian Federation.
On September 28, 2023, the Government of the Russian Federation approved the rules for the assessment and sale of shares in the authorized capital of Sakhalin-1 LLC. According to the document, the assessment of the share by order of the Ministry of Energy of the Russian Federation is carried out by B1-Consult LLC. Based on the results of the procedure, an independent appraiser prepares a report and receives a conclusion from a self-regulatory organization of appraisers confirming the assessment results. Payment for the services of the appraiser will be borne by the buyer of the share of Sakhalin-1 LLC.
The Ministry of Energy is obliged to send the report and conclusion to the Federal Agency for State Property Management within five days from the date of receipt. The Federal Property Management Agency, in turn, has 20 days to check the received documents for compliance with assessment standards and must send the corresponding conclusion to the Ministry of Energy. After this, the ministry has three days to prepare and send to the government of the Russian Federation a draft decision on approving the assessment of the share in the authorized capital of the company. After the decision of the Russian government to approve the valuation of the share in the authorized capital of the company comes into force, Rosimushchestvo ensures the sale of the share. For this purpose, a selection of Russian legal entities is carried out that meet the criteria approved by the Government of the Russian Federation.
The initial price of a share in the authorized capital of Sakhalin-1 LLC will be the amount given by the appraiser.
Sakhalin-1 includes three oil and gas fields: Chaivo, Odoptu and Arkutun-Dagi on the northeastern shelf of the peninsula. Total reserves are estimated at 307 million tons of oil and 485 billion cubic meters of natural gas, annual production volume is 11.3 million tons of oil.
