Economy of Sakhalin

Sakhalin is a classic "primary sector of the economy" relying on oil and gas exports, coal mining,forestry, and fishing. Limited quantities of rye, wheat, oats, barley and vegetables are grown, although the growing season averages less than 100 days.

Following the collapse of the Soviet Union and economic liberalization, Sakhalin has experienced an oil boom with extensive petroleum exploration and mining by most large oil multinational corporations. The oil and natural gas reserves contain an estimated 14 billion barrels (2.2 km) of oil and 96 trillion cubic feet (2,700 km) of gas and are being developed under production-sharing agreement contracts involving international oil companies like Exxon Mobil and Shell.

In 1996, two large consortiums signed contracts to explore for oil and gas off the northeast coast of the island, Sakhalin-I and Sakhalin-II. The two consortia were estimated to spend a combined US$21 billion on the two projects which almost doubled to $37 billion as of September 2006, triggering Russian governmental opposition. The cost will include an estimated US$1 billion to upgrade the island's infrastructure: roads, bridges, waste management sites, airports, railways, communications systems, and ports. In addition, Sakhalin-III-through-VI are in various early stages of development.

The Sakhalin I project, managed by Exxon Neftegas Limited (ENL), completed a production-sharing agreement (PSA) between the Sakhalin I consortium, the Russian Federation, and the Sakhalin government. Russia is in the process of building a 136-mile (219 km) pipeline across the Tatar Strait from Sakhalin Island to De-Kastri terminal on the Russian mainland. From De-Kastri, the resource will be loaded onto tankers for transport to East Asian markets, namely Japan, South Korea, and China.

The second consortium, Sakhalin Energy Investment Company Ltd. (Sakhalin Energy), is managing the Sakhalin II project. It completed the