Exxon fully withdraws from Russia after Putin seizes assets

Exxon Mobil on Monday said it has fully exited Russia, with the energy giant saying that President Vladimir Putin had expropriated its assets in the country and “unilaterally terminated” the company’s Sakhalin-1 oil project.

“With two decrees, the Russian government has unilaterally terminated our interests in Sakhalin-1, and the project has been transferred to a Russian operator,” an Exxon Mobil spokeswoman said. 

She didn’t disclose whether Exxon received compensation for the assets, but added that Exxon plans to reserve its legal rights under international law and its production-sharing agreement to pursue remedies.

Russia’s move to seize Exxon’s assets come after seven months of negotiations over a transfer of the company’s stake in the Sakhalin-1 project, according to Reuters, which first reported on Exxon’s move to complete its withdrawal from the country. 

“We made every effort to engage with the Russian government and other stakeholders,” an Exxon spokesperson told the news service. 

In March, the energy giant announced it planned to exit Russia in response to the nation’s invasion of Ukraine and that it would not make any new investments in Russia. 

Exxon’s Russia holdings were valued at more than $4 billion as of 2021, according to company documents. The Sakhalin-1 project, which Exxon has managed since 2005, has generated $16 billion for the Russian government, according to Exxon. 

Earlier this year, Exxon took a $3.4 billion after-tax charge for its Sakhalin-1 assets. It also said the operations represented less than 2% of its total 2021 production, or about 65,000 barrels per day, and 1% of its operating earnings. 

The fallout from the Sakhalin-1 project highlights the clash between Western nations and Russia over Putin’s invasion of Ukraine earlier this year. The U.S. and other Western democracies have imposed sanctions against Russia in response to the invasion, aiming to weaken the country’s economy, which is largely dependent on energy exports. 

Russia, one of the world’s top three crude producers, joined with other members of OPEC+ earlier this month to sharply cut production to support sagging oil prices. Economists believe such a move could deal the struggling global economy another blow, while also raising politically sensitive gas pump prices for U.S. drivers just ahead of key national elections.