Abstract

This case is about the Sakhalin-1 Project considered to be the largest and the most ambitious world-class oil and gas development projects in the world. Located on the northeast shelf of Sakhalin Island in Russia, the project is developed by a consortium of Russian, Indian, Japanese, and US oil and gas companies. Operated by Exxon Neftegas Ltd (ENL), the Sakhalin 1 Project includes three offshore oil fields, the Chayvo, Odoptu, and Arkutun Dagi. The project is being developed in four phases using both onshore and offshore drilling fields. The total recoverable reserves were estimated at 307 million tons of oil and 485 billion cubic meters of natural gas. The case describes the development and execution of the project. Advanced technologies and construction methods were adopted in the execution of the project which reduced the overall cost of development and minimized environmental impact. The case highlights how the project overcame the technical and environmental difficulties to achieve its goals. It discusses how the project team successfully managed the challenges associated with the project such as limited infrastructure, complex regulatory rules, limited skilled labor, and difficult logistics. Analysts opined that with careful planning and efficient use of technologies, the project successfully completed its first phase of development. The project, one of the largest single foreign direct investments in Russia, aimed to fulfill the growing energy demand worldwide. It provided energy supplies for domestic use and for export to Northeast Asia and consolidated Russia’s strategic position as an energy supplier to world markets. The case also discusses the benefits the project brought to Russia, particularly to people of the island of Sakhalin. The case concludes by discussing the future phases of the Sakhalin-1 Project.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Gain insights into project execution and management
• Identify the factors which led to the successful execution of the Sakhalin-1 project
• Understand the importance of innovation and teamwork in project management
• Evaluate the benefits of the Sakhalin-1 project
• Identify and manage the risks associated with oil exploration projects

Keywords

Project management, Project integration, Oil and gas development project, Oil exploration, Production-sharing agreement, Project documentation, Extended Reach Drilling (ERD), Project execution, Offshore and onshore drilling, Onshore processing facility, Oil export system, Concrete Island Drilling System (CIDS), Single Point Mooring (SPM), 3D seismic technology, Lost-time incident, Environmental protection, Community development