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    ExxonMobil ends decades-long Russian business, claiming expropriation


Output at the project has plummeted since the war in Ukraine began. [image credit: Exxon Neftegaz].

by: NGW

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ExxonMobil ends decades-long Russian business, claiming expropriation

ExxonMobil confirmed on October 17 that it had completely left Russia following the expropriation of its assets by the government, drawing a line under nearly three decades that the US major has been working in the country.

In a statement shared with multiple press agencies, ExxonMobil said that "with two decrees, the Russian government has unilaterally terminated our interest in Sakhalin-1 and the project has been transferred to a Russian operator."

"We have safely exited Russia following expropriation," the company said.

ExxonMobil declared its intention to leave Russia at the start of March, days after Moscow launched its invasion of Ukraine. It has been working at the Sakhalin-1 oil project in the country's Far East since 1995.

Russia's state-owned Rosneft, another participant at Sakhalin-1, complained in May that output at the project had practically ceased, blaming its foreign partners, which also include India's ONGC Videsh (OVL) and Japanese consortium SODECO. Russian media reported that month that the project's production had plummeted to a mere 10,000 barrel/day, versus 220,000 b/d pre-war.

Reuters cited sources on October 17 as saying that the steep fall in output was due to ExxonMobil refusing to accept local insurance for tankers. Western insurers withdrew their cover for tankers operated by Russian state shipping group Sovcomflot after the company was hit by Western sanctions.

The Russian government ordered the operatorship of Sakhalin-1 to be passed to a Russian entity earlier this month. The new operator, also called Sakhalin-1, was set up in the Sakhalin Island capital of  Yuzhno-Sakhalinsk as a limited liability company, with only 10,000 rubles ($160) in foundation capital.

ExxonMobil held a 30% stake in Sakhalin-1, while Rosneft and OVL each held 20% and SODECO a further 30%. Japan's government said on October 18 it was still assessing the Russian decree that transferred operatorship of Sakhalin-1, and would continue talks with shareholders in the former consortium. It is a "very important project for Japan," Japanese industry minister Yasutoshi Nishimura told a news conference, according to Reuters.

India's government, meanwhile, said it was maintaining a "healthy dialogue" with Russia and would see what Moscow would offer following the ownership change.