Technicians walk inside the Oil and Natural Gas Corp (ONGC)
group gathering station on the outskirts of Ahmedabad
Mon, October 17, 2022
By Nidhi Verma
NEW DELHI (Reuters) - India's Oil and Natural Gas Corp plans to take a stake in the new Russian entity that will manage the Sakhalin 1 project in the far east as it seeks to retain a 20% share in the asset, three sources familiar with the matter said.
Russian President Vladimir Putin earlier this month issued a decree to establish a new operator for the ExxonMobil-led project and authorised the Kremlin to decide whether foreign shareholders could retain stakes in Sakhalin 1.
"ONGC Videsh will protect its share in the project, which means it will take a stake in the new entity," said one of the sources.
ONGC holds a stake in the project through its overseas investment arm ONGC Videsh.
The new Russian entity, managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf, will own investors' rights in Sakhalin 1. Foreign shareholders have one month to decide on retaining stakes in the project.
Exxon has fully exited Russia after Moscow this month "unilaterally terminated" its interests in the Sakhalin-1 oil and gas project.
Output of Sakhalin 1 collapsed after Exxon declared force majeure in April and refused to accept Russian insurance cover for the tankers as western insurers pulled out due to the sanctions, sources said.
Sakhlin 1 was producing 220,000 bpd before Russia launched its so-called "special military operations" in Ukraine.
Operatorship of the project by a Russian entity will lead to smooth functioning of Sakhalin 1 and would ensure shipping of oil, the sources said.
Two Indian refiners could not lift oil cargoes, sold by ONGC Videsh, due to insurance problems.
The Sakhalin 1 project has turned out to be a money spinner for ONGC Videsh, and accounted for about a quarter of its proved reserves of 124.7 million tonnes in the year ended March 31, 2022.
Sources said ONGC would consider taking additional stake in the project if that makes "commercial sense".
The sources declined to be named citing confidentiality and ONGC Videsh did not respond to Reuters' email seeking comments.
Sakhalin Oil and Gas Development Co (SODECO), a consortium of Japanese firms, holds a 30% stake in the project while Russian oil major Rosneft through Sakhalinmorneftegaz-shelf and R N Astra own the remaining 20% share.
While the Indian company is keen to retain its stake in the project, SODECO said it was still gathering information about the decree.
"We are gathering information about the decree and plan to make a decision by Nov. 12 whether or not we will apply for a stake in the new entity after consulting with our stakeholders, including the Japanese industry ministry", a spokesperson at SODECO said on Monday.
(Reporting by Nidhi Verma; Editing by Bernadette Baum)
Mon, October 17, 2022
By Nidhi Verma
NEW DELHI (Reuters) - India's Oil and Natural Gas Corp plans to take a stake in the new Russian entity that will manage the Sakhalin 1 project in the far east as it seeks to retain a 20% share in the asset, three sources familiar with the matter said.
Russian President Vladimir Putin earlier this month issued a decree to establish a new operator for the ExxonMobil-led project and authorised the Kremlin to decide whether foreign shareholders could retain stakes in Sakhalin 1.
"ONGC Videsh will protect its share in the project, which means it will take a stake in the new entity," said one of the sources.
ONGC holds a stake in the project through its overseas investment arm ONGC Videsh.
The new Russian entity, managed by Rosneft subsidiary Sakhalinmorneftegaz-shelf, will own investors' rights in Sakhalin 1. Foreign shareholders have one month to decide on retaining stakes in the project.
Exxon has fully exited Russia after Moscow this month "unilaterally terminated" its interests in the Sakhalin-1 oil and gas project.
Output of Sakhalin 1 collapsed after Exxon declared force majeure in April and refused to accept Russian insurance cover for the tankers as western insurers pulled out due to the sanctions, sources said.
Sakhlin 1 was producing 220,000 bpd before Russia launched its so-called "special military operations" in Ukraine.
Operatorship of the project by a Russian entity will lead to smooth functioning of Sakhalin 1 and would ensure shipping of oil, the sources said.
Two Indian refiners could not lift oil cargoes, sold by ONGC Videsh, due to insurance problems.
The Sakhalin 1 project has turned out to be a money spinner for ONGC Videsh, and accounted for about a quarter of its proved reserves of 124.7 million tonnes in the year ended March 31, 2022.
Sources said ONGC would consider taking additional stake in the project if that makes "commercial sense".
The sources declined to be named citing confidentiality and ONGC Videsh did not respond to Reuters' email seeking comments.
Sakhalin Oil and Gas Development Co (SODECO), a consortium of Japanese firms, holds a 30% stake in the project while Russian oil major Rosneft through Sakhalinmorneftegaz-shelf and R N Astra own the remaining 20% share.
While the Indian company is keen to retain its stake in the project, SODECO said it was still gathering information about the decree.
"We are gathering information about the decree and plan to make a decision by Nov. 12 whether or not we will apply for a stake in the new entity after consulting with our stakeholders, including the Japanese industry ministry", a spokesperson at SODECO said on Monday.
(Reporting by Nidhi Verma; Editing by Bernadette Baum)
Exclusive-Exxon exits Russia empty-handed with oil project 'unilaterally terminated'
Logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro
Mon, October 17, 2022
By Sabrina Valle
HOUSTON (Reuters) - Exxon Mobil Corp said on Monday that it left Russia completely after President Vladimir Putin expropriated its properties following seven months of discussions over an orderly transfer of its 30% stake in a major oil project.
Exxon did not say if it received any compensation for the assets, which it had valued at more than $4 billion. An Exxon spokesperson declined to comment on whether it will proceed to contest the seizure through an international arbitration process, a possibility flagged in August.
Its departure illustrates the clash between the West and Russia over energy following Moscow's invasion of Ukraine in late February and threats of using nuclear weapons against the country and its supporters. BP, TotalEnergies, Equinor, and Shell have all transferred properties to Russian partners or left operations behind.
"We made every effort to engage with the Russian government and other stakeholders," the Exxon spokesperson said.
The company said it "safely exited" Russia after the government earlier this month "unilaterally terminated" its interests in the Sakhalin-1 oil and gas project, its largest in the country.
Exxon has been trying to relinquish operation of Sakhalin-1 since March 1, when it announced it would abandon all of its more than $4 billion in assets, leaving open the possibility to sell Sakhalin-1. It said it would "closely coordinate" the transfer of operation with its partners - Russian company Rosneft, India's ONGC Videsh and Japan's SODECO to ensure it would be done in a secure way.
In April, Exxon disclosed a $3.4 billion write down on the Russia exit and this month signaled a third-quarter $600 million impairment charge for unidentified assets. Exxon had valued its Russia holdings at more than $4 billion.
On Oct. 7 Putin seized Exxon shares in the oil production joint venture and transferred them to a government-controlled company. In August, Putin had signed a first decree that Exxon said made a secure and environmentally safe exit from Sakhalin-1 difficult. The U.S. producer reacted to August's decree by issuing a "note of difference," a legal step before arbitration.
The harsh language of Exxon's formal exit shows a desired outcome for Exxon - leaving Russia - but in unamicable terms that could translate in multi-year legal disputes, starting with arbitration in European courts.
PHASING OUT
Exxon has been reducing its presence in Russia since 2014, following sanctions against Moscow after it annexed the Crimean peninsula from Ukraine.
The U.S. company had removed earlier this year its expatriate workers and closed its lubricant and chemical businesses in Russia. By July, output at the Sakhalin-1 project fell 10,000 barrels per day (bpd), from 220,000 bpd before Russia invaded Ukraine.
The volume was just enough to provide natural gas to keep the lights on in the Russian cites of Khabarovsk and Vladivostok. About 700 Russia-based employees that kept operations running will be transferred to the new Russia company taking over the asset, Exxon said.
"We are thankful for the professionalism, expertise and commitment demonstrated by ENL’s employees during these difficult circumstances," the Exxon spokesperson said.
Exxon had pledged to take its time and provide for a safe transfer to a new operator to avoid spills, environmental accidents or shutting down the lights of cities supplied by the project.
Russian terms blocked it from transferring operations or negotiating a potential sale to Indian or Japanese partners, which indicated interest in keeping Sakhalin-1's supply.
India's Oil and Natural Gas Corp plans to take a stake in the new Russian entity that will manage the Sakhalin-1 project as it seeks to retain a 20% share in the asset, three sources familiar with the matter said.
Japan will decide what to do about the Sakhalin-1 oil and gas project in Russia's Far East in consultation with its partners as it reviews details of a decree by Moscow, Industry minister Yasutoshi Nishimura said last week.
According to Putin's Oct. 7 decree, Sakhalin-1's foreign partners will have one month after the new Russian company is created to ask the Russian government for shares in the new entity.
Equinor last month agreed to sell Russian assets value at $1 billion for 1 euro. The formal sale allowed Norway's Equinor to forgo future liabilities and investment commitments. On Friday, Danone also sold its assets but kept a minority stake.
(Reporting by Sabrina Valle; editing by Grant McCool)
Logo of the Exxon Mobil Corp is seen at the Rio Oil and Gas Expo and Conference in Rio de Janeiro
Mon, October 17, 2022
By Sabrina Valle
HOUSTON (Reuters) - Exxon Mobil Corp said on Monday that it left Russia completely after President Vladimir Putin expropriated its properties following seven months of discussions over an orderly transfer of its 30% stake in a major oil project.
Exxon did not say if it received any compensation for the assets, which it had valued at more than $4 billion. An Exxon spokesperson declined to comment on whether it will proceed to contest the seizure through an international arbitration process, a possibility flagged in August.
Its departure illustrates the clash between the West and Russia over energy following Moscow's invasion of Ukraine in late February and threats of using nuclear weapons against the country and its supporters. BP, TotalEnergies, Equinor, and Shell have all transferred properties to Russian partners or left operations behind.
"We made every effort to engage with the Russian government and other stakeholders," the Exxon spokesperson said.
The company said it "safely exited" Russia after the government earlier this month "unilaterally terminated" its interests in the Sakhalin-1 oil and gas project, its largest in the country.
Exxon has been trying to relinquish operation of Sakhalin-1 since March 1, when it announced it would abandon all of its more than $4 billion in assets, leaving open the possibility to sell Sakhalin-1. It said it would "closely coordinate" the transfer of operation with its partners - Russian company Rosneft, India's ONGC Videsh and Japan's SODECO to ensure it would be done in a secure way.
In April, Exxon disclosed a $3.4 billion write down on the Russia exit and this month signaled a third-quarter $600 million impairment charge for unidentified assets. Exxon had valued its Russia holdings at more than $4 billion.
On Oct. 7 Putin seized Exxon shares in the oil production joint venture and transferred them to a government-controlled company. In August, Putin had signed a first decree that Exxon said made a secure and environmentally safe exit from Sakhalin-1 difficult. The U.S. producer reacted to August's decree by issuing a "note of difference," a legal step before arbitration.
The harsh language of Exxon's formal exit shows a desired outcome for Exxon - leaving Russia - but in unamicable terms that could translate in multi-year legal disputes, starting with arbitration in European courts.
PHASING OUT
Exxon has been reducing its presence in Russia since 2014, following sanctions against Moscow after it annexed the Crimean peninsula from Ukraine.
The U.S. company had removed earlier this year its expatriate workers and closed its lubricant and chemical businesses in Russia. By July, output at the Sakhalin-1 project fell 10,000 barrels per day (bpd), from 220,000 bpd before Russia invaded Ukraine.
The volume was just enough to provide natural gas to keep the lights on in the Russian cites of Khabarovsk and Vladivostok. About 700 Russia-based employees that kept operations running will be transferred to the new Russia company taking over the asset, Exxon said.
"We are thankful for the professionalism, expertise and commitment demonstrated by ENL’s employees during these difficult circumstances," the Exxon spokesperson said.
Exxon had pledged to take its time and provide for a safe transfer to a new operator to avoid spills, environmental accidents or shutting down the lights of cities supplied by the project.
Russian terms blocked it from transferring operations or negotiating a potential sale to Indian or Japanese partners, which indicated interest in keeping Sakhalin-1's supply.
India's Oil and Natural Gas Corp plans to take a stake in the new Russian entity that will manage the Sakhalin-1 project as it seeks to retain a 20% share in the asset, three sources familiar with the matter said.
Japan will decide what to do about the Sakhalin-1 oil and gas project in Russia's Far East in consultation with its partners as it reviews details of a decree by Moscow, Industry minister Yasutoshi Nishimura said last week.
According to Putin's Oct. 7 decree, Sakhalin-1's foreign partners will have one month after the new Russian company is created to ask the Russian government for shares in the new entity.
Equinor last month agreed to sell Russian assets value at $1 billion for 1 euro. The formal sale allowed Norway's Equinor to forgo future liabilities and investment commitments. On Friday, Danone also sold its assets but kept a minority stake.
(Reporting by Sabrina Valle; editing by Grant McCool)
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