Sakhalin-I field, where India's ONGC Videsh Ltd has 20 per cent stake, will produce 23,000 barrels per day of oil and about 58 million standard cubic feet of gas per day.
OVL Managing Director R S Butola and Steve Terni, President of Exxon Neftegas, the operator of Sakhalin-I, turned on the valve for starting production.
Speaking on the occasion, Petroleum Minister Mani Shankar Aiyar said: "It is not usual for a company from a developing nation to be associated with such kind of a project. For us in India, Sakhalin-I is the beginning of a much longer and deeper association with the island on east coast of Russia." Russian Minister of Industry and Energy Viktor Borisovich Khristenko said the project marked a new beginning.
Officials said oil production from Sakhalin-I field will rise to 50,000 barrels per day by April 2006 and hit the peak level of 250,000 barrels per day by 2006 end.
Gas production will rise to 200 million standard cubic feet per day by next year, they said.
OVL, the overseas arm of state-run Oil and Natural Gas Corp, purchased a 20 per cent stake in Sakhalin-I project for 1.7 billion dollars in 2001. In November, India had approved 1.1 billion dollar of additional investment in Sakhalin-I.
ONGC Videsh plans to ship around 7,00,000 barrels of oil from Sakhalin-I fields to India every 70 days from April 2006. This would be India's first shipment of equity crude oil from the Russian fields.
The Sakhalin-I consortium, comprising Exxon Neftegas Ltd. (the operator) - 30 per cent, Japanese Sodeco - 30 per cent, Russian RN-Astra LLC - 8.5 per cent and Russian Sakhalinmorneftegaz-Shelf - 11.5 per cent, has already hired five ice class tankers on long-term charter. Tankers would be delivered next year and OVL would hire one of them for transporting its share of output of around 50,000 bpd (April-November 2006) to India.
The Sakhalin-I field is expected to produce about 12.5 million tonnes of oil and 10 billion cubic meters of gas annually at its peak production level, of which OVL's share would be 20 per cent, in proportion to its equity.
The total production of Sakhalin-I in its 40-year life cycle is estimated at 307 million tonnes of oil and 485 billion cubic meters of gas.
The Sakhalin-I project includes the Chayvo, Odoptu and Arkutun-Dagi fields. Over the 40-year life of the project, plans call for producing 2.3 billion barrels of oil and 17 trillion cubic feet of gas.
Total investment in full development of the fields has been estimated at more than 12 billion USD.
Officials said ExxonMobil has found an extra 560 million barrels of oil in the Sakhalin. The discovery of new reserves, which represent around a quarter of already confirmed reserves of 307 million tonnes or 2.3 billion barrels, would be a boost for the project.