Behind Exxon's decision to bail on Russia plans
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ExxonMobil disclosed in a filing yesterday that it's abandoning joint ventures with Russian state oil giant Rosneft to drill in Arctic waters, Siberia and the Black Sea as a result of U.S. and European Union sanctions against the Russian firm.
- Exxon said the decision led to an after-tax loss of $200 million.
Why it matters: "The move is an about-face for Exxon, which had opposed the sanctions over Russia’s invasion of Crimea and argued they unfairly penalized U.S. companies while allowing foreign energy rivals to operate in the country, the world’s largest oil producer," Reuters notes.
- Yes, but: "With its investments already frozen by the sanctions, it was not clear what current activities, if any, Exxon’s move affected," The New York Times reports.
- The move to scuttle joint ventures formed several years ago does not end Exxon's longstanding Sakhalin project off Russia's east coast, according to multiple reports.
One level deeper: Samuel Lussac, an analyst with Wood Mackenzie, said in a short note Thursday that the move is no surprise at a time of rising sanctions pressure. But it's a blow to Rosneft.
- "Rosneft loses a partner of choice, which could have brought financing and expertise for the development of the next wave of Russian oil supply," Lussac writes.