Exxon Mobil Corporation (NYSE:XOM) has left Russia completely after President Vladimir Putin expropriated its properties following seven months of discussions over an orderly transfer of its 30% stake in a major oil project, Reuters has reported in an exclusive.
The newswire noted that Exxon did not say if it received any compensation for the assets, which it had valued at more than $4 billion. An Exxon spokesperson declined to comment on whether it will proceed to contest the seizure through an international arbitration process, a possibility flagged in August, Reuters said.
The company said it "safely exited" Russia after the government earlier this month "unilaterally terminated" its interests in the Sakhalin-1 oil and gas project, its largest in the country.
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Exxon has been trying to relinquish operation of Sakhalin-1 since March 1, 2022, when it announced it would abandon all of its more than $4 billion in assets, leaving open the possibility to sell Sakhalin-1.
In April, Exxon disclosed a $3.4 billion write-down on the Russia exit and this month signaled a third-quarter $600 million impairment charge for unidentified assets. Exxon had valued its Russia holdings at more than $4 billion.
In August, Putin had signed a first decree that Exxon said made a secure and environmentally safe exit from Sakhalin-1 difficult. The US firm reacted to Putin's August decree by issuing a "note of difference," a legal step before arbitration. On October 7, Putin seized Exxon shares in the oil production joint venture and transferred them to a government-controlled company.
Exxon has been reducing its presence in Russia since 2014, following sanctions against Moscow after it annexed the Crimean peninsula from Ukraine. Earlier this year, the company removed its expatriate workers and closed its lubricant and chemical businesses in Russia. By July, output at the Sakhalin-1 project had fallen to 10,000 barrels per day (bpd), from 220,000 bpd before Russia invaded Ukraine.
Exxon's departure illustrates the clash over energy following Moscow's invasion of Ukraine in late February. BP, TotalEnergies, Equinor, and Shell have all transferred properties to Russian partners or left operations behind.
Contact the author at jon.hopkins@proactiveinvestors.com