U.S. TO HELP RUSSIA DEVELOP OFF-SHORE OIL.

Russia’s first test of U.S.-style offshore private petroleum production looms off the coast of Sakhalin Island and construction awaits only the legal nod from Moscow, an executive with the agency overseeing oil development said. Vladislav Shcherbakov, first vice president of the State Committee on Geology and Use of Mineral Resources, said a new law now before the Duma would simplify production-sharing agreements for offshore oil development in his country. Shcherbakov was in Anchorage attending a U.S. Minerals Management Service workshop on U.S.-style leasing policies for offshore petroleum development. Sakhalin oil and gas development is expected to provide energy for regional use in the Russian Far East, not products for export. Under the Russian system, 60 percent of the royalties from offshore oil and gas production are earmarked for local and regional governments. (11)

The Sakhalin development plan is the product of agreements signed last year by the Russian government with Marathon, Royal Dutch/Shell, and other foreign companies who are expected to participate in the new production system. Russia’s mineral resources agency is setting up five-year schedules for offshore oil and gas lease sales to parallel those used by the United States. The cooperative plan includes simultaneous U.S. and Russian lease sales in adjacent parts of the far-north Chukchi Sea, which separates Alaska and Siberia. The oil and gas fields are estimated to hold 750 million barrels of oil and other petroleum liquids and 14 trillion cubic feet of natural gas. Production, projected to start in 2000, could reach 180,000 barrels of liquids a day and 1.5 billion cubic meters of gas a day.

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