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18 Oct, 2022 12:29

US oil giant leaves Russia empty-handed

ExxonMobil abandons a major stake in the Sakhalin-1 oil and gas project
US oil giant leaves Russia empty-handed

US energy giant ExxonMobil announced on Monday that it has left Russia completely, discontinuing operations in the Sakhalin-1 project in the country’s Far East, after it was transferred to a local entity.

“With two decrees, the Russian government has unilaterally terminated our interests in Sakhalin-1 and the project has been transferred to a Russian operator,” the company said in a statement, adding, “We have safely exited Russia following the expropriation.”

Exxon did not elaborate on whether it received compensation for the assets, which it had valued at more than $4 billion.

Last month, ExxonMobil reportedly threatened the Russian government with a lawsuit unless Moscow allowed the company to exit the oil and gas project. The company reportedly said in a statement that it had been trying to leave the Russian project since March but was prevented from doing so by a presidential order.

Russian President Vladimir Putin signed a decree earlier this month preventing investors from ‘unfriendly states’ from selling their shares in certain strategic enterprises, including the Sakhalin ventures.

The decree mandated the Russian government to form a new legal entity to take over the rights and responsibilities of the Sakhalin-1 project, its investor rights, and its operator, Exxon Mobil subsidiary Exxon Neftegas Limited, which held a 30% stake in the project.

Foreign stakeholders were given one month to declare whether they wished to maintain their stakes in the new company. The decree stated that those who choose not to would be offered compensation, adjusted for the potential losses brought on by the halt in production at Sakhalin-1 earlier in the year.

Russian oil major Rosneft, India’s ONGC Videsh, and Japan’s SODECO also have stakes in the venture.

Earlier in March, ExxonMobil announced its intention to exit oil and gas operations in Russia due to Western sanctions.

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