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Wednesday, August 17, 2022

Exxon loses over $1 billion over Russian sanctions

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Exxon, the worlds largest oil & gas company (by value), has lost about $1 billion dollars from its Russian projects due to the sanctions placed on the country by the EU and the US.

The company indulged itself in flagship projects such as the Sakhalin-1, and others with Russia’s Rosneft which began to devalue future revenues after they cut their Arctic projects. The Arctic venture alone valued at $500 million.

Exxon entered the Russian markets in the ’90s and has gained more wealth since its establishment. It was set to expand towards exploration in the Arctic shelf until, unfortunately, the US and EU dropped sanctions on Russia over ‘annexation of Crimea and its support for Eastern Ukrainian rebels.’

As it now looks for the oil giant, the have been told by the White House to pull out of the region and make their way home. Although $1 billion does not seem like much for a company that made about $1.7 billion in profits in the second quarter of the year, it is still a loss that has also prevented future revenues.

The Arctic region of Russia provided a wide range of possibilities for the company including relative accessibility of the resources, a good working relationship with the local partners, and no great pressure from environmentalist groups. It is also quite a big loss because such large scale projects that were planned to be in Russia have become increasingly rare.

Russia doesn’t seem too shaken by the sanctions, after all, they have learned to live with them and have found different means of trade with their Eastern partners. The same also applies to Iran. All that can be said is, Exxon have suffered a great loss.

This article was first posted on Oilprce.com

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