Supermajor ExxonMobil is moving closer towards completing its full exit of the stalled Sakhalin 1 oil and gas project in Russia’s far east, claiming in its regular quarterly filing with the US Securities & Exchange Commission (SEC) that it is “engaged in transitioning” its 30% stake “to another party”.
ExxonMobil, which also acts as operator of the project through its Exxon Neftegaz subsidiary, announced its exit following Russia’s invasion of Ukraine in February.
The project has suffered serious setbacks following the international sanctions imposed in response to Russia’s invasion of Ukraine, including reports of an almost threefold drop in oil output to just over 60,000 barrels per day between 1 and 15 May, compared with the April average.
According to ExxonMobil’s SEC filing, the supermajor’s exit from Sakhalin 1 would result in an estimated 150 million barrels of oil equivalent no longer qualifying as proven reserves — less than 1% of the supermajor’s 18.5 billion boe of proven reserves at the end of 2021.
ExxonMobil has “made significant progress exiting the Sakhalin 1 venture”, a company spokesperson told Reuters.
ExxonMobil has not named a potential buyer of its 30% stake in Sakhalin 1, but earlier reports in India’s media suggested that project partner ONGC Videsh is considering increasing its 20% shareholding in the scheme to help secure a larger share of its oil.
India has become a major purchaser of Russian oil in recent months, with its low price attracting importers after Russian producers were hit by international sanctions and a ban on oil sales to Europe.
India’s ONGC Videsh had also been suggested as a possible buyer of supermajor Shell’s 27.5% stake in the Sakhalin 2 project following the UK supermajor’s decision to exit that project following Russia’s invasion of Ukraine.
Reviving production from Sakhalin 1 is understood also to be important to local oil producer Sakhalinmorneftegaz, which holds licences for several onshore oil and gas fields in the north of Sakhalin Island.
After being forced to halt production because of a faulty legacy pipeline, Sakhalinmorneftegaz agreed to build a 116-kilometre pipeline from its fields to the De-Kastri marine export terminal on the Russian mainland, which would also carry output from Sakhalin 1.
Sakhalinmorneftegaz — a subsidiary of Russian privately held oil holding Nezavisimaya Neftyanaya Kompaniya — produced at a rate of around 23,000 bpd of oil before the shutdown in July 2020, compared with an average output of 258,000 bpd by Sakhalin 1 at that time.