Exxon Strikes Deal to Recoup Russia Losses

Exxon Aims to Recoup Losses in Russia

Exxon Mobil (XOM) has taken an important step towards recovering the billions of dollars it lost after withdrawing from its Russian operations in 2022. The company signed a non-binding agreement with Russian oil giant Rosneft. The deal provides the first concrete framework for Exxon to potentially recover the $4.6 billion impairment associated with its Russian exit.

Commercial Dialogue and Next Steps

The agreement, signed last August and September, is seen as a cautious step towards a commercial dialogue between the two energy giants, Reuters reported. Progress, however, depends on the peace process in Ukraine and the easing of US and European sanctions.

Exxon's Goals and Strategies

Exxon CEO Darren Woods told reporters that talks on potential compensation had begun in 2023, and confirmed to reporters that they were focused on recovering losses. Woods declined to elaborate on the scope of any deal. At the heart of Exxon's impairment is its 30% operator stake in the Sakhalin-1 project off Russia's Pacific coast. The company's exit from the project resulted in the loss of access to 150 million barrels of oil equivalent reserves.

New Developments in Guyana

In addition, ExxonMobil announced its final investment decision for the Hammerhead project development offshore Guyana after receiving government approvals. By 2029, first oil is expected to be extracted. Hammerhead will have a production capacity of approximately 150,000 barrels per day, bringing total installed block capacity to close to 1.5 million bpd.

Exxon expects total commitments for the seven approved Stabroek projects to exceed $60 billion, which will support local suppliers and encourage further investment. Since 2019, more than $7.8 billion has flowed into Guyana's Natural Resource Fund through these projects.