Oil Majors Fleeing Russia, but Were They Going Anyway?

March 2, 2022

Above, Senator Marco Rubio grills Rex Tillerson in hearings to approve Mr Tillerson, former CEO of Exxon Mobil, as Donald Trump’s first Secretary of State. Under Mr Tillerson, ExxonMobil had pushed for massive oil and gas projects in Russia, and actually received a medal from Mr Putin for his contributions to the ruling Petro-oligarchy.
I won’t go into Mr Rubio’s cowardice in failing to follow up on Mr Trump’s subsequent threats and blackmail against Ukraine – but, since the invasion of last week, Exxon has followed BP and Shell in announcing an exit from their projects in Russia.

Do we really believe that Exxon Mobil “supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. ” ?

Maybe, but my theory is these guys were looking for an excuse to bail, and continue the ongoing write down of assets that’s been going on for several years, and they try to reposition themselves for a world where oil is shrinking as an industrial activity.

Washington Post:

ExxonMobil said it plans to extract itself from a large oil and gas project in Russia and make no new investments in the country, becoming the latest energy major to break ties over Russia’s invasion of Ukraine.

The offshore project, off the coast of Sakhalin Island, was a big focus of former Exxon CEO Rex Tillerson, who began overseeing the investment in the late 1990s and developed a close relationship with Russian President Vladimir Putin before being named President Donald Trump’s first secretary of state in 2017.

“ExxonMobil supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” the company said in a statement late Tuesday.\

Exxon holds a 30 percent stake in the project as part of a consortium that also includes Russia’s Rosneft and Japanese and Indian companies. The project has produced more than $16 billion in taxes, royalties and other payments to Russian governments, federal and regional, according to a company website.

Exxon has called the project one of the largest single foreign direct investments in Russia, and has been developing it since the 1990s.

“We are beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture,” the company said.

Exxon said that because it runs the project as the operator, its effort to “discontinue operations will need to be carefully managed and closely coordinated with the co-venturers to ensure it is executed safely.”

Tillerson’s role overseeing the project led to deep relationships with Russian leaders, including Putin, with whom Tillerson met on multiple occasions, both as Exxon chief and later as secretary of state in the Trump administration.

BP, Shell and a host of other Western companies in recent days have announced they planned to depart Russia. It isn’t clear whether any of the companies will find buyers for their holdings or simply walk away from them.


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