• Oil & Gas - News
  • Updated: January 09, 2023

Russia Resumes Production On Major Oil Project After Exxon Exit

Following the exit of ExxonMobil, Russia has increased oil production from the Sakhalin-1 project and anticipates the field will soon pump at its maximum capacity of 220,000 barrels per day (bpd), a source familiar with the situation told Reuters on Monday.

According to an industry source cited by Reuters, Sakhalin-1 is currently producing oil at a rate of about 150,000 bpd, or 65% of its potential. Production will peak at 220,000 bpd in "three to four weeks," the source added.

After Russia invaded Ukraine, Exxon made an announcement at the beginning of March 2022 that it would leave Sakhalin-1.

Exxon announced that it would end the project as well as all other Russian-related initiatives, and would not make any more investments there.

The Sakhalin-1 project was put on hold by Exxon in April 2022 as a result of Western sanctions against Moscow.

Approximately 273,000 barrels of Sokol crude were shipped daily by the facility before the Ukraine War, with South Korea serving as the primary destination for the cargoes.

Japan, Australia, Thailand, and the US were all recipients of shipments of Sakhalin-1 oil.

Exxon abandoned the project, resulting in a decrease in oil output in Sakhalin-1.

Exxon's ownership of the Sakhalin-1 oil and gas project was transferred to a Russian commercial organisation by Russia in October, eliminating Exxon as a shareholder.

Exxon owned 30% of Sakhalin-1, but Russian President Vladimir Putin issued an executive order creating a new organisation to oversee the Far Eastern oil and gas project's operations.

The decree gave the Russian government the power to decide how to divide up project ownership and expel foreign partners as necessary.

As Moscow reorganised ownership of domestic oil and gas projects in the wake of a large-scale departure of Western corporations following the Russian invasion of Ukraine, Moscow has chosen to allow Japanese firms to maintain their stake in the Sakhalin-1 oil project in Russia's Far East. 

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Lawrence Agbo
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