US supermajor ExxonMobil has become the latest major oil and gas player to exit its operations in Russia as a result of Moscow’s decision to invade Ukraine.
ExxonMobil confirmed it was “beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture”, while also pledging to no longer invest in new developments in Russia.
“ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” ExxonMobil said.
“We are deeply saddened by the loss of innocent lives and support the strong international response. We are fully complying with all sanctions.”
The US operator added that it had “an obligation to ensure the safety of people, protection of the environment and integrity of operation”
“Our role as operator goes beyond an equity investment. The process to discontinue operations will need to be carefully managed and closely coordinated with the co-venturers in order to ensure it is executed safely,” the statement read.
The announcement followed media reports earlier on Tuesday that ExxonMobil had started scaling back its operations at the offshore Sakhalin-1 project in Russia’s Sakhalin Island region.
The Sakhalin Online news website cited an unnamed consortium source as saying foreign managers had been told to leave the project for an initial period of one month.
The report also claimed employees had been instructed to prepare two extended reach development wells for shutdown in the coming two weeks, which were currently being drilled into producing reservoirs.
According to the Russian Energy Ministry, Sakhalin-1 produced nearly 83 million barrels of oil and condensate and over 12 billion cubic meters of natural and associated gas in 2021.
The project is operated under a production sharing agreement with the Russian government, with foreign partners responsible for investments that brought the project onstream in 2005.
ExxonMobil has a 30per cent interest in Sakhalin-1, which it operates via its Russian subsidiary Exxon Neftegaz on behalf of Japanese consortium Sodeco (30 percent), India’s ONGC Videsh (20 percent) and Russian producer Rosneft (20 percent).
ExxonMobil’s decision follows similar announcements by other Western oil and gas companies pulling out of the country in response to Russia’s invasion of Ukraine.
UK supermajor BP was the first major western energy giant to announce its planned exit, revealing over the weekend it anticipated to take a $25 billion hit over its decision to exit its 19.75 percent shareholding in Rosneft.
Norway’s Equinor quickly followed suit on Monday, announcing it would exit its operations in Russia and halt investment in the country, while on the same day supermajor Shell also announced its planned exit from Russia, as well as an end to its involvement in the Nord Stream 2 Baltic gas pipeline project that would have linked Russian gas to Germany.
French supermajor TotalEnergies on Tuesday also announced it would no longer provide capital for new projects in Russia but stopped short of committing to a total exit.
In response to the mass exodus of some of the world’s largest oil and gas companies, Russian Prime Minister Mikhail Mishustin revealed plans on Tuesday to temporarily block Western companies from exiting their investments in the country.
Prime Minister Mikhail Mishustin said the government was preparing a presidential decree that would temporarily limit the ability of foreign investors to sell Russian assets.
Mishustin said he thought that pressure from sanctions will ease soon after Russia concludes the military phase of its operation in Ukraine. He warned that those investors who leave are likely to be “sorry” about this in the long run, as their places will be taken up by competitors.
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