Petrosakh was founded in 1991 as a Russian-U.S. joint venture to develop the Okruzhnoye field on the Eastern coast of Sakhalin Island. In 1993 and subsequently in 1997, it was licensed to produce oil from the Okruzhnoye field for a period of 20 years and in 2001 for the geological study of the Pogranichnoye Block, which lies directly offshore and parallel to the existing Okruzhnoye field.

The on-shore, producing field, Okruzhnoye, currently produces oil from several wells. Oil quality is light, sweet crude with a gravity of approximately 36° API (0.84 g/cm3), sulphur content of 0.28% and produced water of 3%.

Petrosakh’s operations comprise integrated oil producing, processing, refining and transportation facilities. Most production facilities and equipment were imported from the United States and Canada. Petrosakh also has a rail terminal facility at Pervomaisk and its operational centre is located at the Okruzhnoye field site. Oil is transported by infield pipelines to a central processing plant with a capacity of 8,200 BOPD. Following processing, oil is either sent to export oil storage tanks or to Petrosakh’s refinery directly adjacent to the processing plant. Total oil storage capacity for export is approximately 300,000 barrels. The amount of oil refined versus export storage is decided by the Company’s management based on annual budgets, operating plans and prevailing market conditions.