Exxon quits some Russian joint ventures citing sanctions

Business News
February 28, 2018 / 5 months ago
Exxon quits some Russian joint ventures citing sanctions
Ernest Scheyder, Vladimir Soldatkin


HOUSTON/MOSCOW (Reuters)

Exxon Mobil Corp (XOM.N) will exit some joint ventures with Russia’s Rosneft (ROSN.MM), citing Western sanctions first imposed in 2014, in a move that the Russian company said would result in serious losses for its U.S. partner.

The decision is an about-face for Exxon, which had opposed the sanctions over Russia’s invasion of Crimea and argued they unfairly penalized U.S. companies while allowing foreign energy rivals to operate in the country, the world’s largest oil producer.

The sanctions slowed work on a project by Exxon and Rosneft on what was hailed as a major discovery in the Kara Sea above the Arctic Circle.

 

Exxon’s exit will not affect the Sakhalin project off the eastern coast of Russia, Exxon and Rosneft spokesmen said.

Sakhalin-1 operates under a Production Sharing Agreement struck in the mid-1990s and currently produces around 200,000 barrels of oil per day.

The joint ventures were reached when U.S. Secretary of State Rex Tillerson was Exxon’s chief executive.n


Tillerson has taken a hard line on Russia as secretary of state, in contrast to his position while at Exxon. 

Tillerson has said U.S. sanctions imposed for Russia’s 2014 annexation of Crimea would remain in place until Crimea is returned to Ukraine.

He has accused Moscow of imposing its will on other nations by force and employing disinformation and cyber attacks to subvert Western democracies.


In 2012, Exxon and Rosneft detailed an exploration partnership with plans to invest as much as $500 billion in developing Russia’s Arctic and Black Sea oil reserves.
 

Rosneft said that resources at the projects, from which Exxon decided to withdraw, total 12.3 billion tonnes of oil and gas condensate as well as 15.2 trillion cubic meters of gas.

Exxon said in a financial filing on Wednesday that it recorded a fourth quarter after-tax loss of $200 million due to the withdrawal plan.
    Exxon wound down drilling in Russia’s Arctic in 2014 after the sanctions were imposed. 
 

Reporting by Ernest Scheyder in Houston and Vladimir Soldatkin.