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Exxon says Sakhalin oil production peaks this year

Exxon Mobil Corp., the world's biggest oil company, said oil production from its $12.8 billion Sakhalin Island development offshore Russia will peak at 250,000 barrels a day by the end of this year. Crude exports from the DeKastri terminal connected by pipeline to Exxon's Sakhalin 1 project will begin later this month, the Irving, Texas-based company said on Thursday in a statement. Exxon began pumping oil from Sakhalin's subsea wells in October. Russia's Natural Resources Ministry on Wednesday said it won't allow the company to expand the boundaries of Chayvo, one of three fields at Sakhalin 1, to include new discoveries nearby. The prospects instead should be sold at auction, the ministry said. Exxon is the latest oil company targeted in Russian President Vladimir Putin's campaign to strengthen his control of oil and natural-gas reserves.

On Sept. 5, Russian authorities sued to halt Royal Dutch Shell Plc's $20 billion development on another part of Sakhalin Island. The boundary expansion requested by Exxon „is based on the natural outline of the primary field that is now being produced,” Exxon spokesman Robert Davis said yesterday in an e-mail. Russia's decision „could inevitably undermine the confidence of foreign investors and have a significant negative impact on the Russian investment climate.” Exxon Mobil shares rose 51 cents to $67.69 in New York Stock Exchange composite trading. The shares have increased 20 percent this year, compared with a 3.7% rise for the Standard & Poor's 500 index. (Bloomberg)