Putin Orders Seizure Of Exxon-Led Sakhalin 1 Oil And Gas Project
2 mins read
Published on October 27, 2022
Russian President Vladimir Putin signed a decree on Friday that establishes a new operator for the Exxon Mobil Corp-led Sakhalin-1 oil and gas project in Russia's Far East.
Putin's move affecting Exxon's largest investment in Russia mimics a strategy he used to seize control of other energy properties in the country.
The decree gives the Russian government authority to decide whether foreign shareholders can retain stakes in the project.
Exxon holds a 30% operator stake in Sakhalin-1, with Russian company Rosneft, India's ONGC Videsh and Japan's SODECO as partners.
Oil production at the Sakhalin-1 project fell to just 10,000 barrels per day (bpd) in July from 220,000 bpd before Russia invaded Ukraine.
NAVIGATING AN EXIT
Exxon has been trying to exit its Russia operations and transfer its role in Sakhalin-1 to a partner since March, after international sanctions imposed on Moscow.
Russia's government and Exxon have clashed, with the oil producer threatening to take the case to international arbitration.
Exxon declined to comment on Friday's decree.
Japan's SODECO was not immediately available to comment, but an official of the industry ministry, which owns a 50% stake in the firm, said it was gathering information and talking with partners. Japan has stopped buying crude from Russia since June.
Exxon took an impairment charge of $4.6 billion in April for its Russian activities and said it was working with partners to transfer Sakhalin-1's operation. It also reduced energy production and moved staff out of the country.
In August, Putin issued a decree that Exxon said made a secure and environmentally safe exit from Sakhalin-1 difficult. The U.S. producer then issued a "note of difference," a legal step prior to arbitration.
Friday's decree said the Russian government was establishing a Russian company, managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf, that will own investors' rights in Sakhalin-1.
Foreign partners will have one month after the new company is created to ask the Russian government for shares in the new entity, the decree said.
Putin used a similar strategy in a July decree to seize full control of Sakhalin-2, another gas and oil project in the Russian Far East, with Shell and Japanese companies Mitsui & Co and Mitsubishi Corp as partners.
Russia has approved applications by the two Japanese trading houses seeking to transfer their stakes to a new operator.
Great Deals on Used CarsView All Used Cars
- 8,000 km
- 88,000 km
- 53,763 km
- 24,110 km
- 72,000 km
- 20,156 km
- 64,000 km
- 65,000 km
- 85,000 km
- 70,123 km
11 hours ago
The Kia Sonet facelift is slated to be unveiled on December 14. The leaked brochure reveals details about its specifications, features and variants.
Enyaq 85 SUV offers over 560 kms of range while the coupe variant sees range increased to over 570 km.
The latest spy shots of the Tata Punch EV reveal the new LED DRL design on the offering, while the all-electric offering is expected to bring comprehensive upgrades.
This support initiative will run for 10 days from 8 December to 18 December for customers of Tamil Nadu, Andhra Pradesh and Puducherry affected from the flash floods
13 hours ago
The manufacturer also said that it would hike the prices of its commercial vehicle range
14 hours ago
The motorcycle is powered by a 457 cc parallel-twin engine that churns out 47 bhp of max power
14 hours ago
Tata Motors will extend the vehicle warranty of customers affected by Cyclone Michaung, while the company is taking additional measures to improve accessibility to service their vehicles
16 hours ago
Along with monetary aid, Hyundai Motor India Foundation is also working with the state government to delivery emergency relief and essential commodities
16 hours ago
The carmaker said that rising input costs necessitated the revision in pricing.
17 hours ago
Jawa Yezdi motorcycles is holding a mega service camp in Cochin, Kerala from December 14-17 for owners to get free check-ups
Brent crude futures rose 1.8%, to settle at $76.69 a barrel, while U.S. West Texas Intermediate crude (WTI) ended $1.23 higher at $70.90.
Brent crude settled down 1.2%, to $74.99 while West Texas Intermediate U.S. crude futures fell 1%, to $69.26 a barrel.
Brent crude futures fell by 78 cents to settle at $75.91 a barrel. U.S. West Texas Intermediate crude futures slid by 94 cents, to end the session at $69.96 a barrel.
According to the International Energy Agency (IEA), Russia's total exports of oil and petroleum products in February 2023 fell to 7.5 million barrels per day (bpd), from an average amount of 7.7 million bpd in 2022 (7.5 million bpd in 2021).
Fuel demand in February hit its highest level in at least 24 years, data from the website of the Petroleum Planning and Analysis Cell (PPAC) showed this month.