ExxonMobil Corp. is pulling out of some of its joint ventures with Rosneft, a Feb. 28 filing with the US Securities & Exchange Commission confirmed.
In 2013-14, ExxonMobil and Rosneft established various joint ventures for exploration and research activities. In 2014, the European Union and US imposed sanctions related to Russian energy, a Form 10-K said.
US officials late last year expanded sanctions against Russia. Consequently, ExxonMobil said that it has decided to withdraw from the joint ventures.
“The corporation expects it will formally initiate the withdrawal in 2018,” ExxonMobil said in its SEC document, adding that the decision to withdraw results in an after-tax loss of $200 million.
Separately, Wood Mackenzie Ltd. analyst Samual Lussac said, “This decision puts a formal end to ExxonMobil’s long-term strategy of exploring the Arctic, which led to the discovery of the giant Pobeda field in 2014. It also makes the progress at the Far East LNG project less likely.”
“This move is not a surprise in a time when US sanctions pressure keeps increasing,” Lussac said. “In practice, all Arctic offshore exploration and the Trizneft Pilot project (which focused on the Bazhenov shale oil development) were on hold since 2014. Rosneft loses a partner of choice, which could have brought financing and expertise for the development of the next wave of Russian oil supply. ExxonMobil will keep its 30% share in Sakhalin-1.”