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Exxon faces new pressure over dealings with Russia's Rosneft

Exxon faces new pressure over dealings with Russia's Rosneft
Exxon faces new pressure over dealings with Russia's Rosneft   -   Copyright  Thomson Reuters 2022
By Reuters

By Gary McWilliams

HOUSTON -Exxon Mobil likely will face new pressure to severe ties with Russia’s largest oil producer, said analysts, after rival BP agreed to unload a Rosneft stake.

Russia’s attack on Ukraine has unleashed broad economic and political rebukes and corporate withdrawals by banks, technology and other firms unprecedented in their extent. BP on Sunday said it would take a $25 billion writedown to abandon its Rosneft holdings.

Exxon holds a 30% stake, alongside Rosneft, Japan’s SODECO and India’s ONGC Videsh, in Sakhalin Island oil and gas fields in Russia’s Far East. The group with Exxon as operator has exported more than 1 billion barrels of oil and 1.03 billion cubic feet of natural gas since production began in 2005.

“Supermajor E&Ps and major service providers with exposure to Russia will now be facing tremendous pressure to pull investments from Russia,” said Rystad Energy analyst Artem Abramov.

“I will not be surprised if we see big announcements similar to (the) BP-Rosneft one in the next few days, but it will be difficult to speculate on how exactly things will play out,” he said.

An Exxon spokesperson did not reply to a request for comment.

The U.S. oil major previously ended two Russian joint ventures after sanctions were imposed following Russia’s 2014 military operations in eastern Ukraine. Exxon took a $200 million hit to earnings from the exit.

Sakhalin represents one of the largest single direct investments in Russia, according to Exxon, with its three oil and gas fields. The partners have been advancing development of a new liquefied natural gas (LNG) facility on the island. Such plants typically cost several billion dollars to construct.

Exxon last year employed more than 1,000 people across Russia with offices in Moscow, St. Petersburg, Yekaterinburg and Yuzhno-Sakhalinst, according to its website.