ExxonMobil: "If Russia Blocks Withdrawal from Sakhalin Oil and Gas Project, We Will Not Hesitate to Sue"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] ExxonMobil, the largest oil company in the United States, has informed that it is prepared to take legal action if the Russian government continues to block its withdrawal from the Sakhalin oil field development project in the Russian Far East, the Wall Street Journal (WSJ) reported on the 30th (local time).

According to WSJ, Casey Norton, a spokesperson for ExxonMobil, stated that the company recently sent a formal notice to the Russian government demanding a guarantee for the sale of its stake related to the withdrawal from the Sakhalin-1 project, a joint oil and natural gas development venture in the Russian Far East. Such notices are typically issued before litigation, specifying deadlines for mutual agreement or the timing of a lawsuit.

ExxonMobil holds a 30% stake in the Sakhalin-1 project, in which at least $17 billion (approximately 23 trillion KRW) has been invested. However, following Russia's invasion of Ukraine, ExxonMobil suspended operations in March and declared its intention to sell the project. Nevertheless, the sale process has been stalled due to administrative orders from the Russian government.

Last month, Russia announced that the Sakhalin-1 project would be placed under Russian jurisdiction, and earlier this month, it declared a ban until the end of the year on the sale of shares in key strategic industries such as banking and energy by investors from Western unfriendly countries.

The Russian government has not commented separately on ExxonMobil's litigation warning. However, Rosneft, a Russian state-owned oil company and one of the Sakhalin-1 joint venture partners, accused ExxonMobil of unilaterally reducing oil production, causing losses to the joint venture, and demanded ExxonMobil’s return to the project.

In the Sakhalin-1 project, Rosneft holds a 20% stake. Additionally, Japan's Sakhalin Oil and Gas Development Co. (SODECO) and India's state-owned oil company ONGC Videsh are reported to hold 30% and 20% stakes, respectively.