Exxon leaves Russia, leaves $4 billion in assets, doubts Sakhalin LNG project

FILE PHOTO: The logo of Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Expo in Rio de Janeiro
FILE PHOTO: The logo of Exxon Mobil Corp is seen at the Rio Oil and Gas Convention and Exhibition in Rio de Janeiro, Brazil September 24, 2018. REUTERS / Sergio Moraes

March 2, 2022

By Sabrina Valle

HOUSTON (Reuters) – Exxon Mobil on Tuesday said it would pull out of Russian oil and gas operations it valued at more than $4 billion and halt new investment as a result of Moscow’s invasion of Ukraine.

The decision will cause Exxon to withdraw from management of the large oil and gas production facilities on Sakhalin Island in Russia’s Far East, and put the fate of a liquefied natural gas (LNG) facility worth thousands of dollars. billion dollars proposed there.

“We welcome Russia’s military action that violates Ukraine’s territorial integrity and endangers its people,” the company said in a statement criticizing the intensifying military strikes. .

Its exit plan follows dozens of other Western companies, from Apple and Boeing to BP PLC, Shell and Norway’s Equinor ASA that have either suspended business or announced plans to abandon their operations in Russia.

Exxon, scheduled to meet with Wall Street analysts on Wednesday, did not offer a timetable for its exit, nor comment on potential asset cuts. Its assets in Russia were valued at $4.055 billion in its latest annual report, filed in February.

Before that, Exxon had already begun removing American personnel from Russia, two people familiar with the matter said. The number of staff to be evacuated is unclear. The company sent a plane to Sakhalin Island to pick up employees, a resident said.

Exxon operates three major offshore oil and gas fields with operations on Sakhalin Island on behalf of a consortium of Japanese, Indian and Russian companies, including Russia’s Rosneft. The Group has planned to build an additional LNG export terminal at this site.

Anish Kapadia, director of energy and mining researcher Pallissy Advisors.

The company, which has been developing Russia’s oil and gas fields since 1995, has come under pressure to sever ties with Russia because of Moscow’s invasion of Ukraine. Russia calls its actions in Ukraine a “special operation”.

The Sakhalin facilities, which Exxon has operated since production began in 2005, represent one of the largest single direct investments in Russia, according to the project description on Exxon’s website. The recent operation has pumped about 220,000 barrels of oil per day.

A spokesman for Japan’s Sakhalin Petroleum Development Corporation (SODECO), which owns a 30% stake in the Sakhalin-1 project, was trying to confirm details of Exxon’s announcement, a spokesman for know more that they will monitor the Russian-Ukrainian situation and decide what to do in the future.

State-backed oil producer Japan Petroleum Exploration Co (Japex), which owns 15.285% of SODECO, is also examining the details of Exxon’s announcement and will speak with partners to decide on plans in future, a Japex spokesperson said.

(Reporting by Sabrina Valle; Additional reporting by Gary McWilliams and Yuka Obayashi; Editing by Grant McCool, Kenneth Maxwell and Richard Pullin) Exxon leaves Russia, leaves $4 billion in assets, doubts Sakhalin LNG project

Caroline Bleakley

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