Sources say that Exxon has signed an initial agreement with Rosneft in order to map out a possible route to recover Russian losses.
According to sources familiar with these talks, U.S. oil giant Exxon Mobil signed an initial non-binding agreement to help Exxon recover a $4.6 billion loss it took on its Russian activities in 2022 due to Moscow's invasion in Ukraine.
The agreement is a first step in repairing the commercial ties between the two nations, but little progress will be made until Moscow has made enough progress towards a peace accord in Ukraine and the United States and European Union have relaxed their sanctions against Russia.
Terry Wade, spokesperson for Exxon, declined to comment.
Rosneft said it hadn't signed an agreement with Exxon to work in Russia when asked to comment on the talks last week. In a subsequent inquiry, Rosneft was asked if it had signed an initial non-binding agreement with Exxon in order to help the U.S. Oil Major recoup its money from its Russian operations. Rosneft didn't respond.
Exxon was given permission to hold talks with Rosneft during the administrations of U.S. president Donald Trump as well as former president Joe Biden. The talks to recoup the losses are ongoing since 2023. This was revealed by chief executive Darren Woods last week. Exxon held discussions with Rosneft as the United States and Russia officials met to discuss Ukraine. This was reported in August. Trump met Russian President Vladimir Putin mid-August in Alaska to try to convince Moscow to accept a peace agreement with Ukraine.
Sources said that since then, peace efforts have stagnated. However, Exxon has continued to hold talks with Rosneft. One of the sources stated that the companies signed the contract in late August or very early September.
Two sources confirmed that the new agreement with Rosneft is not legally binding and sets up the conditions for discussions which could lead to Exxon recovering the $4.6 billion written-off.
Woods, when asked by an interviewer on Wednesday if Exxon had reached a deal with Rosneft, said that the discussions were about recovering losses. He did not elaborate further.
Exxon has taken a $4.6 billion impairment on its 30% operator share in the Sakhalin-1 oil and gas project, located off Russia's Pacific Coast.
Exxon was among the Western companies that announced they would leave Russia as soon as Russia invaded Ukraine in February 2022. Governments around the globe condemned the invasion and began to impose sanctions.
Exxon stated that it lost 150 million barrels equivalent to oil of its proven reserves due to the withdrawal from Russia.
The United States, along with the European Union, have imposed multiple sanction on Rosneft's chief Igor Sechin. Sechin is a close Putin ally.
In response to the U.S. & its allies freezing $300 billion in Russian assets and reclaiming Moscow's stakes of various Western companies, Russia expropriated a number of Western assets in 2022 & 2023.
Some of the world's largest oil companies have written off assets in Russia. BP suffered a loss of up to 25 billion dollars in February 2022 when it sold its nearly 20% stake in Rosneft. Rosneft accounted for half of BP’s oil and natural gas reserves, and a quarter of its production.
Shell has written down its stakes of $3.4 billion in the Sakhalin-2 LNG plant and Siberian Oil Fields. Sergei Ryabkov, Russian deputy minister of foreign affairs, said to local media last week that Moscow is ready to intensify discussions with the United States about energy cooperation, which includes the Sakhalin-1 Project.
Ryabkov stated, "I can mention Sakhalin-1 to be the most obvious example that discussions have begun." Valery Limarenko, Sakhalin Island Governor, said that Exxon's return would be beneficial.
Limarenko stated that "we need to continue to develop and it would be more effective to do so together." (Reporting from Anna Hirtenstein in London, Marwa Rashad and Sheila Dang at Houston; Additional reporting and editing by Daniel Wallis;
(source: Reuters)
