Putin Opens Door for Exxon's Return to Sakhalin-1 Oil Project

Russia's President Putin signed a decree that could allow foreign investors, including Exxon Mobil, to regain shares in the Sakhalin-1 oil and gas project. This move comes after Putin met with President Joe Biden and could signal a shift in Russia's stance on foreign investment in the country's energy sector. The decree is seen as a positive step for Exxon Mobil, which had previously been forced to exit the project due to sanctions.

In a significant development, Russian President Vladimir Putin has signed a decree that could pave the way for foreign investors, including Exxon Mobil (NYSE:XOM), to regain shares in the Sakhalin-1 oil and gas project [1]. This move follows Putin's meeting with U.S. President Joe Biden and signals a potential shift in Russia's stance on foreign investment in its energy sector.

The decree, which builds upon a previous October 2022 decree that effectively nationalized the Sakhalin-1 project, requires foreign shareholders seeking to restore their stakes to contribute to the lifting of Western sanctions against Russia. Additionally, they must sign contracts for the supply of necessary foreign equipment and transfer funds to the project's accounts [2].

Exxon Mobil, which previously owned 30% of the project and was its operator, was forced to exit due to sanctions, writing off $4.6 billion in the process. The company became the only foreign investor to completely withdraw from the project. However, the new decree offers a pathway for Exxon Mobil and other Western companies to potentially re-enter the Russian energy sector, albeit under stringent conditions [2].

The decree also allows India's ONGC Videsh and Japan's SODECO to retain their stakes in Sakhalin-1, with Rosneft appointed as the project operator through its subsidiary Sakhalinmorneftegaz-Shelf. The broader implications for Western companies' return to the Russian energy sector remain uncertain, as it would require a significant easing or lifting of U.S. and EU sanctions [2].

Since the full-scale invasion of Ukraine in February 2022, more than 1,300 international companies have reduced or ceased their operations in Russia, resulting in a loss of over $170 billion [2]. The decree by Putin could be seen as an attempt to attract foreign investment back into the Russian energy sector.

References:
[1] https://seekingalpha.com/news/4486289-russia-appears-to-open-door-for-potential-exxon-return-to-sakhalin-1-project
[2] https://biz.liga.net/en/all/tek/novosti/putin-signs-decree-allowing-us-exxon-to-return-to-sakhalin-1-project