The Philippines is set to take delivery in early August of the first cargo of crude oil from the Russian Far East island of Sakhalin in a bid to diversify its source of energy.

Some 700,000 barrels of light sweet crude oil from the Vityaz Complex of the Sakhalin Energy Investment Company, Ltd. were loaded on 23 July 2003 onto the tanker Pacific Leo, for delivery to the refineries of Pilipinas Shell Petroleum Corp. in the Philippines.

“Sakhalin Island’s proximity to Japan and Korea provides opportunities for back haul freight into Southeast Asia, making it attractive for refineries in that region,” Sakhalin Energy General Manager for Commercial Affairs Andrew Seck told Philippine Ambassador to Moscow Jaime Bautista in a letter on 25 July 2003.

The Philippines sources most of its crude oil from the Middle East.  With a view of guaranteeing its energy security, Philippine authorities approached in late 2002 potential Russia oil suppliers with the aim of sourcing 10 percent of the country’s total domestic annual requirement of 600,000 metric tons of crude oil.

Possible supplies of Russian oil was one fo the main topics discussed with President Gloria Macapagal-Arroyo and Foreign Secretary Blas F. Ople during Russian Foreign Minister Igor Ivanov’s visit to Manila in December 2002.

During a trip to Russia in October 2002, House Speaker Jose de Venecia and Energy Secretary Vincent Perez met with senior officials of Yukos Oil Corp., OAO Sibneft and OAO Rosnet, Russia’s biggest oil companies.

Yukos, which agreed in April 2003 to merge with Sibneft to create the fourth largest oil company in the world, has expressed interest in supplying oil as well as engaging in oil exploration activities in the Philippines.

The crude oil shipment is the second time the Philippines has bought oil from Russia since 1990.  Caltex (Phils.) Inc. imported 568,495 barrels of crude oil from the Urals through the Russian Black Sea port of Novorossiysk in April 2003.

Sakhalin Energy, base in Yuzhno-Sakhalinsk on the southern tip of Sakhalin Island in the Sea of Okhostsk, was established in April 1994 as a joint venture of Royal Dutch/Shell, Mitsui & Co., Ltd. and Mitsubishi Corporation.

Its Vityaz Complex, composed of an offshore production platform – Russia’s first, a single anchor leg mooring and a floating storage and offloading unit in the Piltin-Astokhskoye oilfield 16 kilometers off Sakhalin Island’s northeast shore, is operational only during the ice-free period of the summer months.

Starting operations in July 1999, the Vityaz Complex is expected to produce 9.7 million barrels or 70,000 barrels per day in its fifth production season this year.

In 2003, Sakhalin Energy has sold crude oil to China, Japan, Korea, Taiwan, and the United States.  The Philippines thus becomes its sixth client this year.  END