ExxonMobil reportedly seeking to bypass sanctions to return to Russia

By bne IntelliNews April 20, 2017

US oil major ExxonMobil has applied to the US Treasury Department seeking a waiver from Russian sanctions in order to resume joint ventures with Kremlin-controlled oil major Rosneft, the Wall Street Journal reported on April 19, citing sources familiar with the matter.

Reportedly ExxonMobil renewed its efforts to have the projects approved shortly after its former CEO Rex Tillerson became US secretary of state in February.

ExxonMobil, along with ConocoPhillips, was one of the first foreign hydrocarbon majors to start operations in Russia, and also the first to pull out because of international sanctions imposed over Russia’s annexation of Crimea in 2014.

In 2015, the company pulled out of joint exploration drilling with Rosneft in the Arctic Kara Sea due to US sanctions restricting offshore drilling technology transfers. As a result, the Russian state oil company reportedly had to postpone Arctic drilling launch and bear $2bn development costs alone.

ExxonMobil also discontinued its participation in the Sakhalin-1 liquefied natural gas project, with the Russian Federation now suing the US corporation for $637mn worth of income tax breaks it allegedly received under the production sharing agreements. ExxonMobil held a 30% stake in Sakhalin-1 along with Rosneft (20%), Japan’s Sodeco (30%), and India’s ONGC (20%).

The claim will be heard by the Stockholm Arbitration Court on April 24-28, with Russia ready to settle the case out of court, according to a March 23 report by TASS.

The new CEO of Exxon Darren Woods at a meeting in Moscow in March confirmed his interest in participating in projects in Russia, TASS reported on March 17, citing Russian Energy Minister Alexander Novak, who highlighted the Sakhalin-1 as a key project of possible renewed cooperation.

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