Alexander Khoroshavin, the governor of the Sakhalin region, announced recently during the Sakhalin Oil and Gas Conference that the island is capable of increasing natural gas production by six percent compared to the results of the pre­vious year. During 2012, the company’s output amounted to 28 billion cubic meters. There are two major gas producing projects on Sakha­lin Island. They are Sakhalin-1 and Sakhalin-2. Sakhalin-2 is expanding its capabilities.

Oliver Lazar, head of Shell’s branch in Russia, said that additions to Sakhalin-2 will be con­structed in short order. He added that Australia and the U.S. compete with Sakhalin for the Asia- Pacific region. Lazar believes that Sakhalin-2’s additions should be completed in the shortest possible timeframe. Once completed, several projects like Sakhalin-2 will supply the entire Asia-Pacific region with large amounts of natural gas.

The Sakhalin-2 project is operated by Sakha­lin Energy, which develops the site under a pro­duction sharing agreement. Roman Dashkov, the CEO of the Sakhalin-2 project, announced that the operator of the site will pay USD2.5 billion into Russia’s budget for the year 2013 based on the agreement with the government. Last year, the payment amounted to USD1.8 billion. 2012 was the first year that the Sakla- hin-2 project started to make payments into the country’s budget. The company’s opera­tor plans to construct a booster compressor complex and drill additional wells.

The liquefied natural gas facility at Sakhalin-2 will produce 10 million tons of LNG every year. The plant is jointly owned by Gazprom with the share of 50 percent, Shell (27.5 percent), Mit­sui (12.5 percent), and Mitsubishi (10 percent). Additional facilities will increase the output of Sakhalin-2 by half.