ExxonMobil ‘winding down’ Arctic well, complying with US, EU sanctions on Russia

ExxonMobil Corp. released a statement that the company is complying with all US sanctions on Russia after news reports that the operator had halted operations on its first arctic exploration well—University-1—in Russia’s Kara Sea.

In an energy industry brief, Raymond James & Associates Inc. analysts Darren Horowitz and Edward Rowe noted, “This being the first major exploration prospect drilled in the Russian Arctic, the well (part of a joint venture with [OAO] Rosneft) has garnered an exceptionally high profile in the media—even though its results would be completely inconsequential for production and reserves over any investable timeframe….”

By halting the well, the analysts noted, “it appears that Exxon was unable to find a creative ‘workaround’ to last week’s tightened US and [European Union] sanctions on technology transfer to Russia.”

In its statement, the supermajor said, “The US Treasury Department, recognizing the complexity of the University-1 well and the sensitive Kara Sea arctic environment, has granted a license to ExxonMobil and other US contractors and persons involved to enable the safe and responsible winding down of operations related to this exploration well.”

It said, “The license recognizes the need to protect the safety of the individuals involved in these operations as well as the risk to the environment. All activities related to the wind down will proceed as safely and expeditiously as possible.”