Exxon to exit Russia, leaving $4 billion in assets, Sakhalin LNG project in doubt

By Sabrina Valle

HOUSTON (Reuters) -Exxon Mobil on Tuesday mentioned it might exit Russia oil and gasoline operations that it has valued at greater than $4 billion and halt new funding on account of Moscow’s invasion of Ukraine.

The choice will see Exxon pull out of managing giant oil and gasoline manufacturing amenities on Sakhalin Island in Russia’s Far East, and places the destiny of a proposed multi-billion greenback liquefied pure gasoline (LNG) facility there doubtful.

“We deplore Russia’s army motion that violates the territorial integrity of Ukraine and endangers its folks,” the corporate mentioned in a press release important of the intensifying army assaults.

Its deliberate exit follows dozens of different Western corporations starting from Apple and Boeing to BP PLC, Shell and Norway’s Equinor ASA which have halted enterprise or introduced plans to desert their Russia operations.

Exxon, which is scheduled to satisfy with Wall Road analysts on Wednesday, didn’t present a timetable for its exit, nor touch upon potential asset writedowns. Its Russia belongings have been valued at $4.055 billion in its newest annual report, filed in February.

Earlier, Exxon started eradicating U.S. staff from Russia, two folks conversant in the matter mentioned. The variety of workers being evacuated was unclear. The corporate despatched a airplane to Sakhalin Island to retrieve workers, one of many folks mentioned.

Exxon operates three giant offshore oil and gasoline fields with operations primarily based on Sakhalin Island on behalf of a consortium of Japanese, Indian and Russian corporations that included Russia’s Rosneft. The group had been advancing plans so as to add a LNG export terminal on the website.

“Exxon’s Russian enterprise is comparatively small within the context of its wider enterprise, so it doesn’t have the identical significance because it has to BP or TotalEnergies, if it have been to desert its Russian belongings,” mentioned Anish Kapadia, a director at power and mining researcher Pallissy Advisors.

The corporate, which has been creating its Russian oil and gasoline fields since 1995, had come below stress to chop its ties with Russia over Moscow’s invasion of Ukraine. Russia calls its actions in Ukraine a “particular operation”.

The Sakhalin amenities, which Exxon has operated since manufacturing started in 2005, represents one of many largest single direct investments in Russia, in response to a undertaking description on Exxon’s web site. The operation not too long ago has pumped about 220,000 barrels per day of oil.

Japan’s Sakhalin Oil and Fuel Growth (SODECO), which owns a 30% stake within the Sakhalin-1 undertaking, is attempting to verify particulars of Exxon’s announcement, a spokesperson mentioned, including that it’ll keep watch over the Russia-Ukraine scenario and resolve what to do sooner or later.

State-backed oil producer Japan Petroleum Exploration Co (Japex), which owns 15.285% in SODECO, can be checking particulars of the Exxon’s announcement and can discuss to its companions to resolve a future plan, a Japex spokesperson mentioned.

(Reporting by Sabrina Valle; Further reporting by Gary McWilliams and Yuka Obayashi; Modifying by Grant McCool, Kenneth Maxwell and Richard Pullin)

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