ExxonMobil holds tense back-channel talks with Rosneft for return to Russia - WSJ

Investing.com - Exxon Mobil Corp (NYSE:XOM) has held secret talks with Russian state energy giant Rosneft over a possible return to the Sakhalin-1 project. That information came to light, according to The Wall Street Journal, based it on sources familiar with the talks. This contact came more than two years after Exxon's forced exit from Russia due to Moscow's invasion of Ukraine and subsequent Western sanctions.

Exxon Senior Vice President Neil Chapman led the talks, the Journal reported. Only a select group in the US oil giant was aware of these negotiations. The talks revolved around Exxon rejoining the multibillion-dollar Arctic energy project if approval can be obtained from both Washington and Moscow as part of a possible Ukraine peace process.

Exxon executives have also contacted the US government to investigate whether there is clarity on enabling a return. In this context, a recent meeting took place between CEO Darren Woods and US President Donald Trump. This meeting took place during a broader reassessment of the channels of US-Russian business relations in the context of frozen energy assets and deteriorating geopolitical stability.

Talks reportedly began shortly after Exxon's exit in 2022. These contacts were made possible thanks to the licenses of the US Treasury Department, which allowed limited communication with Russian interlocutors. Negotiations gained momentum during Trump's early 2024 presidential campaign. In February, Chapman met with Rosneft CEO Igor Sechin in Doha, despite being subject to strict US sanctions.

Shortly after Trump met with Russian President Vladimir Putin in Alaska, the Kremlin issued a decree allowing foreign companies to re-enter the Sakhalin venture. Conditions for re-entry include the supply of external equipment, lobbying for the lifting of sanctions, and concerted pressure on Western governments.

Exxon withdrew from Sakhalin-1 amid growing international condemnation of Russia's war in Ukraine. In the process, it recorded more than $4 billion in assets as losses and disclosed that its 30% stake was effectively seized by Moscow. Kremlin officials have blocked any asset sales. He terminated Exxon's participation by presidential decree. The company responded to the move by calling the situation a seizure.

Despite the dispute, Exxon has quietly maintained informal ties with top Russian energy leaders throughout the conflict, according to sources cited in the report. The US company is now looking for ways to recoup its losses, even if a full return to Sakhalin seems impossible under the current sanctions.

Bringing back a leading Western oil partner for Moscow will serve both economic and symbolic goals as Russia's energy infrastructure grapples with sanctions and stalled foreign investment. Although Russian oil production remains strong, Western analysts warn that declining imports of expertise and limited technology could weaken production in the long run.

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