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ExxonMobil Readies Lawsuit Against Russia Over Megaproject Exit

ExxonMobil could sue the Russian government over a decree from Vladimir Putin blocking the supermajor’s announced withdrawal from a massive oil project in Russia, The Wall Street Journal reports, citing sources with knowledge of the matter. 

Exxon has already notified Russian authorities it could pursue legal action unless Russia allows the U.S. oil and gas giant to exit the Sakhalin-1 joint venture. 

In the early days of the Russian invasion of Ukraine, Exxon said it would quit the Sakhalin-1 oil project in Russia. 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 was managed by Exxon on behalf of its partners in the consortium, which include Japanese Sodeco, India’s ONGC Videsh, and Russia’s oil giant Rosneft.

More recently, Exxon has said it is in the process of transferring the 30% stake “to another party.” 

However, in early August, Putin signed a new decree with which Russia banned companies from what it considers “unfriendly” countries from selling stakes in key energy projects and oil and gas production sharing agreements by the end of the year. 

Exxon has subsequently sent a notice of difference to the Russian federal government, which launches a period of possible remedy in commercial contracts before going to court, Exxon’s spokesman Casey Norton told the Journal. 

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Rosneft, for its part, said that the matter could be resolved if normal production activities at Sakhalin-1 are restored. 

“The return to normal production activities of the Sakhalin-1 project could create the necessary conditions for resolving all contentious issues,” a representative for Rosneft told the Journal.

For another Russian project, Sakhalin-2, Putin ordered in July that a newly-created state Russian company take over the rights and obligations of Sakhalin Energy Investment Co., the joint venture running the project. 


In August, the Russian government gave Sakhalin-2 minority foreign investors – Shell, and Japan’s Mitsui & Co and Mitsubishi – one month to claim their stakes in a new entity that will replace the existing project. Shell has confirmed it is looking at ways to exit the project. The Japanese companies are expected to keep their stakes, Japan’s Industry Minister Koichi Hagiuda has said, as carried by Reuters.  

By Tsvetana Paraskova for Oilprice.com

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