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    Sakhalin I, Kharyaga fields to undergo checks in March - watchdog

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    Inspections of production-sharing agreements on the Sakhalin I and the Kharyaga oil and gas projects in Russia will start this month, the environmental watchdog said Thursday.

    MOSCOW, March 1 (RIA Novosti) - Inspections of production-sharing agreements on the Sakhalin I and the Kharyaga oil and gas projects in Russia will start this month, the environmental watchdog said Thursday.

    The Federal Service for the Oversight of Natural Resources launched a series of inspections of oil and gas projects last year following alleged violations of environmental laws by operators.

    Oleg Mitvol, deputy head of the service, said a repeat probe into the Kharyaga oil field, operated by French oil major Total in northern Russia, will begin March 12.

    "We will carry out the inspection at the request of the Federal Agency for the Management of Mineral Resources, which has raised some issues, including on the commissioning of wells," he said.

    The mineral resources regulator initiated license revocation discussions on Kharyaga at the end of last year after revealing that the operator had failed to follow the central commission's recommendations on the field's development, and in particular failed to observe the gas drive recovery process, burning up 60% of natural gas produced in 2005.

    Also in April, the Natural Resources Ministry accused Total of failing to meet its targets for Kharyaga under a 1995 production-sharing agreement (PSA).

    It said the investor had failed to increase production of crude and introduce new technologies and equipment for effective production since the agreement came into force in 1999.

    Total owns a 50% stake in the project, alongside Norway's Hydro (40%) and Russia's Nenets Oil Company (10%).

    This month will also see an inspection begin on the Sakhalin I oil and gas project in the Far East.

    "We are planning to start the first stage of the inspection of Sakhalin I March 28, which will involve a document check," said Mitvol.

    He added that the second stage will begin in May when the inspection team is due to arrive at the site.

    The project, which is operated under a PSA by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, is located on Sakhalin Island's northeastern shelf and is expected to bring in around $52.2 billion to the Russian budget by 2054, when it is scheduled to end.

    The Sakhalin I operator has already been blasted last year by the Russian financial regulator, the Audit Chamber, for serious violations of its PSA and Russia's Land Code.

    "An inspection revealed that the work plan and expenditure schedules under the Sakhalin I project between 1997 and 2005 have not been fulfilled, except in 2000 and 2005," the Audit Chamber said at the time.

    Apart from the U.S. company, which has a 30% stake, the Sakhalin I international consortium comprises Russia's state-controlled Rosneft (20%), India's ONGC (20%), and Japan's SODECO (30%).

    The environmental watchdog announced plans to conduct an inspection of Sakhalin I last December, raising concerns that it could also face the problems that Shell and the Sakhalin II project has experienced since September 2006.

    Sakhalin Energy, Sakhalin II's operator previously led by Royal Dutch Shell, experienced months of intense pressure from Russian authorities, who accused it of causing serious environmental damage to Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

    The operator's raising of its project cost estimate to $22 billion infuriated Russian authorities, since under the PSA signed in the 1990s, Russia would only start receiving revenue once the operator has recouped all its costs.

    The clampdown on the project, deemed by experts as the Kremlin's drive to resume control of the country's mineral resources, culminated in the purchase by state-controlled energy giant Gazprom of 50% plus one share in Sakhalin Energy.

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