Exxon’s Sakhalin-1 comeback: Russia’s new decree clears the way for a full return to operations on the Russian oil field.
Putin’s Decree Opens Door for Exxon Mobil to Return to Sakhalin-1
On August 15, Russian President Vladimir Putin signed a decree that could allow foreign investors—such as U.S. oil giant Exxon Mobil—to regain shares in the Sakhalin-1 oil and gas project. The move follows a prior decree in October 2022 that ordered the seizure of the project.
Key Points of the New Decree
- Foreign shares must support lifting Western sanctions.
- Contractual agreements for supplies of foreign-made equipment are required.
- Funds must be transferred to the project’s accounts.
Exxon Mobil’s Background
Exxon Mobil previously held a 30% operator share in Sakhalin-1, making it the only non-Russian investor to exit its stake. The company took a $4.6 billion impairment charge when Moscow sent troops into Ukraine in February 2022.
Current Status of the Project
- Rosneft subsidiary Sakhalinmorneftegaz-shelf is the new operator.
- Russian government controls foreign investors’ ownership rights.
- Indian ONGC Videsh, Japanese SODECO, and Russian Rosneft maintain their stakes.
Implications for Western Investment
The path for Western investors to return to Russia is unclear. U.S. and EU sanctions would need to be lifted, and Russian barriers remain high. Trump and his team are evaluating how sanctions might be lifted quickly if talks progress.
Future Outlook
In December 2024, Putin extended the sale period for Exxon’s unclaimed stake until 2026. The decree marks a potential turning point for foreign investment in Sakhalin-1, contingent on the resolution of sanctions and contractual compliance.
