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Exxon resumes arbitration proceedings with Rosneft on Sakhalin 1

Exxon initiated arbitration proceedings in April, when the preliminary agreement on hydrocarbons crossflows balancing expired

MOSCOW, August 3. /TASS/. Exxon Neftegaz Limited, a participant in the Sakhalin-1 consortium, resumed arbitration proceedings against Rosneft in the International Chamber of Commerce in Paris on oil crossflows balancing. Such information is contained in papers of India’s ONGC, another consortium member.

Exxon undertook such actions after Rosneft had demanded 89 bln rubles ($1.4 bln) from the Consortium.

Exxon initiated arbitration proceedings on April 24 of this year, when the preliminary agreement on hydrocarbons crossflows balancing expired. The parties extended the agreement on the same day until May 25 and proceedings in the ICC were suspended.

Exxon is at the same time holding talks with Rosneft for a settlement deal, ONGC says in its papers.

Rosneft filed a lawsuit for the sum of 89 bln rubles ($1.4 bln) against five companies participating in the Sakhalin-1 project "for unfounded enrichment" in the period from 2015 to 2018, according to the court’s statement made earlier.

The company claims the recovery of funds for "unfounded enrichment and interest for the use of third parties" money, accrued for the period from July 10, 2015 to May 31, 2018. The claim was filed against Sakhalinmorneftegaz-Shelf, RN-Astra, Exxon Neftegaz Limited, Sakhalin Oil and Gas Development Co., Ltd. and Indian ONGC Videsh limited.

In late 2017, Rosneft asked DeGolyer and MacNaughton Corp. to conduct an independent assessment of volumes of oil and condensate flows between the licensed site of the Chayvo northern tip and the Chayvo Field of the Sakhalin-1 Project, as well as other license areas of Rosneft and Sakhalin-1.

The Northern Tip of the Chayvo field was defined as a separate license area. Rosneft won the tender for its development and began to operate there in 2014. The central and southern areas of the Chayvo field are being developed as part of the production sharing agreement by the Sakhalin-1 consortium.

Sakhalin-1 is the first large-scale offshore project in Russia implemented under the PSA conditions (concluded in 1996). Rosneft holds a 20% share in the project, ExxonMobil - 30%, SODECO - 30%, and ONGC Videsh Ltd. - 20%. Sakhalin-1 includes three offshore fields: Chayvo, Odoptu and Arkutun-Dagi located in the northeastern shelf of Russia’s Sakhalin Island.