Exxon pulls out of Russia completely after Putin seizes assets

Exxon Mobil on Monday announced it had exited Russia altogether, with the energy giant saying President Vladimir Putin had expropriated its assets in the country and “unilaterally terminated” the company’s Sakhalin-1 oil project.

“With two decrees, the Russian government unilaterally terminated our interests in Sakhalin-1, and the project was transferred to a Russian operator,” an Exxon Mobil spokeswoman said.

She did not disclose whether Exxon had received compensation for the assets, but added that Exxon planned to reserve its legal rights under international law and its production sharing agreement to pursue the claims.

Russia’s decision to seize Exxon’s assets comes after seven months of negotiations over a transfer of the company’s stake in the Sakhalin-1 project, according to Reuters, which first reported on Exxon’s decision to complete its exit from the country.

“We have made every effort to engage with the Russian government and other stakeholders,” an Exxon spokesperson told the press service.

In March, the energy giant announced it planned to leave Russia in response to the nation’s invasion of Ukraine and that it would not make any new investments in Russia.

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Exxon’s holdings in Russia were valued at more than $4 billion in 2021, according to company filings. The Sakhalin-1 project, managed by Exxon since 2005, has generated $16 billion for the Russian government, according to Exxon.

Earlier this year, Exxon took a $3.4 billion after-tax charge for its Sakhalin-1 assets. This too said operations accounted for less than 2% of its total 2021 production, or about 65,000 barrels per day, and 1% of its operating profit.

The fallout from the Sakhalin-1 project highlights the clash between Western nations and Russia over Putin’s invasion of Ukraine earlier this year. The United States and other Western democracies imposed sanctions on Russia in response to the invasion, in an effort to weaken the country’s economy, which is largely dependent on energy exports.

Russia, one of the world’s top three crude producers, joined other OPEC+ members earlier this month to greatly reduced production to support falling oil prices. Economists believe such a move could deal another blow to the struggling global economy, while raising politically sensitive pump prices for U.S. drivers just before key national elections.