The Kremlin has pushed Exxon Mobil Corp. out of a major Russian oil-and-gas project and transferred the Texas oil giant’s stake to a Russian entity, according to the U.S. company.
Moscow blocked Exxon’s XOM, +1.44% efforts to transfer operatorship and sell its 30% stake in the Sakhalin-1 venture in Russia’s Far East for months, and has now wiped out Exxon’s stake entirely. As a result, Exxon has pulled out of Russia, the company said Monday.
The Kremlin didn’t provide any indication it would pay Exxon for the value of its stake. Exxon said it has left its legal options open under its production-sharing agreement and international arbitration law. If the company pursues legal action, the matter could take years to resolve.
The largest U.S. oil company vowed in March to leave Russia shortly after the invasion of Ukraine, saying it would make no further investments in the country. It had cultivated ties with Russia for decades, but had withdrawn from at least 10 other joint ventures after the U.S. and its allies imposed sanctions on Russia following its 2014 invasion of Crimea. Sakhalin-1 hadn’t been covered by those sanctions.
Exxon declared force majeure in April, and reduced production from the Sakhalin Island development to about 10,000 barrels of oil and gas a day from 220,000. It also took a $ 3.4 billion accounting charge related to its Russia exit in the first quarter.
An expanded version of this report appears on WSJ.com.
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