Saturday, May 28

Exxon declares force majeure on Russian Sakhalin-1 operations


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Exxon Mobil Corp said on Wednesday that its Russian unit Exxon Neftegas Ltd has declared force majeure for its Sakhalin-1 operations, where it has become increasingly difficult to ship crude out of due to sanctions on Russia.

The Sakhalin-1 project produces oil off the coast of Sakhalin Island in the Russian Far East, exporting about 273,000 barrels per day of a grade of crude oil known as Russian Sokol. Exxon is discontinuing its operations there following Russia’s invasion of Ukraine.

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Project stakeholders, which include Exxon and India’s Oil and Natural Gas Corp, are having difficulty chartering tankers to ship oil out of a region that generally needs ice vessels to navigate the journey.

That is because of growing concerns from shippers over reputation risk and the increasing difficulty for Russian assets to find insurance coverage.

“As a result, Exxon Neftegas Ltd has curtailed crude oil production,” a spokesperson said in response to an e-mail query from Reuters.

The bulk of Russian Sokol crude is exported to South Korea, while other destinations include Japan, Australia, Thailand and the United States.

The latest tanker to load at Russia’s De Kastri port this week was Aframax tanker Captain Kostichev, according to data on Refinitiv Eikon. The vessel is currently located off De Kastri port.

Japan’s Sakhalin Oil and Gas Development (SODECO) consortium, which owns a 30% stake in the Sakhalin-1 project, declined to comment. An official said the company could not comment on operations due to confidentiality agreement with the operator Exxon. (Reporting by Florence Tan; additional reporting by Yuka Obayashi in Tokyo Editing by Marguerita Choy)



financialpost.com