Exxon Mobil flagged it would join key rivals in exiting Russia as pressure grows on global energy giants to respond decisively to the invasion of Ukraine.
The producer, which holds a 30% stake in the Sakhalin-1 offshore oil venture in Russia’s Far East, will begin steps to discontinue operations and exit the project, Exxon said in a statement. No timeframe was given for actually halting production at the plant, which the oil major operates and is its only remaining oil-producing asset in Russia.
“Given the current situation, ExxonMobil will not invest in new developments in Russia,” the company said, ending decades-old links with a country that had once been viewed as a vital, long-term growth engine.
In a matter of days, the world’s top energy producers have flagged plans to exit Russian investments at a likely cost of tens of billions of dollars, and have upended relationships with Moscow that have been cultivated over decades. Earlier rounds of sanctions wiped out a vast portfolio of Exxon’s drilling prospects amassed by former Chief Executive Officer Rex Tillerson.
The process to exit Sakhalin-1, which produced some 227,000 barrels a day last year, will be carefully conducted with its partners, the company said. These include units of Russia’s state-backed Rosneft PJSC, India’s ONGC Videsh and Sakhalin Oil and Gas Development, a consortium that includes Japan Petroleum Exploration, Japan National Oil Corp, Itochu and Marubeni
Energy was specifically excluded from the initial sanctions announced last week by the US and European powers, but pressure has been building on the largest global companies to shun Russia. US President Joe Biden is being pressured to ban imports of Russian crude to starve Vladimir Putin’s government of cash.
Sakhalin-1 was a technical marvel that involved drilling record-setting wells that bored down and sideways for up to seven miles to tap oilfields that had frustrated the Soviets when they discovered oil there in 1979.
Too deep and remote to be extracted by 1970s-era technology, the trove remained out of the Russians’ reach until the dissolution of the soviet state opened the nation’s oil sector to foreign supermajors such as Exxon. The US company led the development and began pumping the first barrels of crude from those fields in 2005.
TotalEnergies SE, which has operations in Russia representing around $1.5 billion of its total cash flow, or about 5%, said Tuesday it won’t follow peers in immediately ditching its Russian operations. The energy producer will comply with any sanctions, and will no longer provide capital for new projects in Russia, according to a statement.