Exxon to return to Sakhalin-1 after Russia's decree
The Russian President Vladimir Putin signed on Friday a decree which could allow foreign investors to recover shares in the Sakhalin-1 project, including Exxon Mobil.
The decree was signed on the same day that Donald Trump and Russian President Vladimir Putin met in Alaska. At the summit, opportunities for business collaboration and investment will be discussed alongside discussions to bring peace to Ukraine.
The decree published on Friday was a follow up to the one Putin signed in 2022 which ordered the seizure the Sakhalin-1 Project.
Exxon held a 30% operator stake in this lucrative project and is the sole non-Russian investor who has sold its stake.
Exxon didn't immediately respond to a request for comment.
It is not clear how Western investors can return to Russia, as the U.S. & EU would have to lift extensive sanctions in order to do so. The Russian government also places high barriers in the way of companies who may wish to return after spending significant sums to leave the country three year ago.
Trump and his team are considering what sanctions they might be able lift quickly if the talks progress. Sakhalin-1 is not directly listed under the extensive U.S. energy sanctions.
In order to recover their shares, foreign investors must support the lifting Western sanctions. The decree also stipulates that foreign shareholders must conclude contracts to supply the necessary equipment made abroad to the Sakhalin-1 Project, and to transfer funds into Sakhalin-1 account.
Exxon has taken a $4.6 billion impairment charge to exit its Russian operations after Moscow sent troops to Ukraine in February 2022.
Putin extended the period of sale for the Exxon share in Sakhalin-1 that was not claimed until 2026.
The October 2022 decree established Rosneft subsidiary Sakhalinmorneftegaz-shelf as the new operator, allowing the Russian government to decide foreign investors' ownership rights in Sakhalin-1.
Exxon was joined by Rosneft from Russia, India's ONGC Videsh, and Japan's SODECO. Both ONGC Videsh, and SODECO were allowed to retain their stakes by the Russian government. Reporting by Olesya Astakhova; Writing by Robert Harvey, Editing by Nina Chestney and Simon Webb; Rosalba O’Brien.
(source: Reuters)
