Russian energy minister expects deal with Exxon over Sakhalin-1 budget

The Russian Energy Ministry expects a deal to be struck soon with Exxon Neftegas on a budget for the Sakhalin-1 oil and gas project, Energy Minister Sergei Shmatko said on Tuesday.
"Our aim is to put an end to the dispute within the next two to three weeks," Shmatko said.
The Sakhalin-1 project is being operated within a production sharing agreement (PSA). Exxon Neftegas has suggested a $3.5 billion 2010 budget, but the government considers this too high and had approved just $1 billion at the end of 2009.
The governor of Sakhalin island in Russia's Far East, where the offshore project is located, has threatened to replace the operator if the budget was not cut.
The Sakhalin-1 project includes the Chaivo, Odoptu and Arkutun-Dagi deposits, with reserves estimated at about 307 million tons of oil (2.3 billion barrels) and 485 billion cubic metres of gas (17 trillion cubic feet).
The project's investors are Exxon Neftegas and Japan's Sodeco with 30 percent each, while Russia's Rosneft and India's ONGC have 20 percent each.