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ExxonMobil will exit the Sakhalin-1 oil project in Russia, following the example of other Big Oil majors, including BP and Shell, who quit their Russian operations following the Russian invasion of Ukraine and the Western sanctions in response.
“ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” the company said in a news release.
“We are deeply saddened by the loss of innocent lives and support the strong international response. We are fully complying with all sanctions,” Exxon also said.
The company noted that it would not be making new investments in Russia, either, and added that the process of discontinuing operations would be coordinated with its co-owners in the consortium.
The Sakhalin-1 project is managed by Exxon on behalf of its partners in the consortium, which include Japanese Sodeco, India’s ONGC Videsh, and Russia’s Rosneft.
According to the Wall Street Journal, Exxon’s pullout will be a challenging task. It would need to ensure at least critical staff is present at the project site to ensure the safe shut-down of production. What’s more, if it tries to sell its 30-percent in the project, it may have to look hard for buyers as the market for Russian assets has been squeezed overnight by sanctions.
Exxon has complied with previous sanctions on Russia, too, but they did not affect the Sakhalin-1 project. In the past two decades, the field has exported over 1 billion barrels of crude, according to the WSJ, and some 1 billion cu ft of natural gas.
Besides BP and Shell, Norway’s Equinor has also begun to wind down its business in Russia, and French TotalEnergies has announced it will not make new investments in the country, although the energy major stopped short of announcing a full exit.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.