The Kremlin bought American Exxon’s stake in the Sakhlin-1 project in Russia, and the company transferred its stake to a Russian firm, according to the announcement.
Moscow obstructed Exxon’s attempts to move the operating firm and sell its 30% interest in the Sakhlin-1 project in Russia’s Far East for a number of months, and has since erased Exxon’s entire shareholding.
Exxon stated it withdrew from Russia and characterised Moscow’s action as an expropriation of ownership.
The Kremlin did not provide any indication that it will pay Exxon the value of its share, and Exxon said it had left its legal options open under the production participation agreement and the international arbitration law, but if the company takes legal measures, it may take years to solve the problem.
The largest American oil corporation announced in March that it would leave Russia quickly after the invasion of Ukraine and that it would not make any additional investments there.
The corporation has had relationships with Russia for many years, but Sakhlin 1 was exempt from the sanctions the United States and its allies imposed on Russia following its annexation of the Crimea in 2014. As a result, Sakhlin 1 withdrew from at least 10 additional cooperative projects.
Exxon decreased production from Sakhlin Island to roughly 10,000 barrels of oil and natural gas per day from 220,000 after declaring a force majeure in April.
Additionally, it included $3 in accounting expenses.
4 billion because of its withdrawal from Russia in the first three months.
The project was not completely closed because it still provided energy to the residents of Sakhlin Island, a sensitive area for the environment, and because Exxon had operated Sakhin 1 since the 1990s. This made Exxon’s exit from the project particularly challenging. In addition, it was responsible for safety and environmental measures.
According to Exxon spokeswoman Megan McDonald, “Our priority has always been to be a responsible operator by protecting employees, the environment, and the safety of activities in Sakhlin -1.”
Exxon’s portion was transferred to a newly established Russian business this month by order of President Vladimir Putin, who also stated that Exxon and other international investors in Sakhlin -1 may seek for ownership in the new company. Exxon Exit states that it does not intend to submit an ownership application for the project.
Exxon escalated its conflict with Russia in August when it warned Moscow that unless it was permitted to withdraw from the project, it would file a lawsuit.
The corporation notified Russian authorities of the discrepancy, and the lawyers claimed it was a typical requirement for commercial contracts as a preventative measure against lawsuits.
It also leads to a deadline in which the two parties reach an agreement or the issue can move to litigation.
In dealing with the Russian government and other stakeholders, we have tried our best, said McDonald.
Exxon, an American oil firm, is seized by Russia in Sakhlin
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