The Sakhalin-1 project saw production drop after Exxon refused to accept local insurance for tankers, sources told Reuters.
After Russia invaded Ukraine, Western companies stopped insuring tankers operated by state-owned Softcomflot.
The next EU sanctions against Russia include a broad ban on Russian oil tanker insurance, among other energy-related services.
ExxonMobil-led Russian oil projects see production slump after U.S. companies refuse to accept local insurance for tankers, and the potential for what will happen to Moscow’s energy sector after new European sanctions take hold. provided a clue.
a source told Reuters From 220,000 bpd before Russia invaded Ukraine, production at the Sakhalin-1 Russian Pacific project this year has fallen to just 10,000 barrels per day.
Production collapsed after Western companies stopped insuring tankers operated by state-owned Softcom Flot, which had been subject to a series of previous sanctions, Reuters reported.
Exxon’s Russian arm, Exxon Neftegaz, has had problems charting tankers due to sanctions and has refused to cooperate with Softcom Flot, the report said.
An Exxon spokesperson told Insider: Announced in March Intent to terminate the Sakhalin-1 project, cease its role as operator and take the necessary steps to no longer invest in the project in Russia.
“The exit is a complex process and we remain committed to operating in a manner that protects the safety of our employees, the environment and the integrity of the Sakhalin-1 project,” Exxon said in an emailed statement. “Two recent orders resulted in the Russian government unilaterally ending our interest in Sakhalin-1 and transferring the project to a Russian operator. I reserve my rights.”
Earlier this year, Russian President Vladimir Putin signed a power of attorney giving control over Sakhalin-1 to Rosneft subsidiary Sakhalin Morneftegas Shelf. Exxon said in August that he would transfer his 30% stake in Sakhalin-1, which the company holds, to a third party.
The collapse of production at the Sakhalin project comes ahead of new European Union sanctions, including a broad ban on insurance against Russian oil tankers, which will take effect on 5 December.
Read the original article at business insider