EXXONMOBIL is pulling out of its joint venture with Rosneft, Russia's largest oil company, following US sanctions against Russia.
The two companies signed an agreement in 2011 for exploration of the Russian Arctic, along with shale oilfields in Siberia and the Black Sea. The agreement was formed after the collapse of a similar deal between Rosneft and BP. The agreement had called for Exxon to carry out exploration by 2022-23 with plans to invest up to US$500bn. According to Rosneft, the reserves had 12.3bn t of oil and 15.2trn m3 of gas.
In 2014 the US and EU imposed sanctions on Russia following the invasion and subsequent annexation of Crimea, and the sanctions targeted the Arctic, shale, and deep water.
The withdrawal is expected to be formally initiated this year with an after-tax loss of US$200m for Exxon, according to a financial filing made by Exxon on 28 February. This is well under the potential loss of up to US$1bn that it had warned of last year.
Rosneft said in a statement:
"Rosneft will continue to unilaterally carry out these projects and will welcome ExxonMobil returning to these projects if such legislative opportunity arises. We will pursue our collaboration with ExxonMobil on projects that are not affected by the existing limitations as well as on future projects."
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