In a bold statement, the Exxon-Mobil corporation announced it will exit oil and gas operations in Russia’s far east Sakhalin Island. The exit, which is due to Russia’s invasion of the Ukraine, also halts the addition of any new investments. This ‘get out of Dodge’ move would leave over $4 billion in assets behind. The decision puts the future of a proposed multibillion-dollar Liquified Natural Gas (LNG) facility in limbo, as well. Plans that were underway to add an LNG export terminal may be halted.
The company stated, “We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people.” The planned exit follows a ‘who’s who’ list of other western companies who are all cutting ties with Russia in some fashion, including Apple, Boeing, BP and Shell. The company, which is scheduled to meet with Wall Street analysts on Wednesday March 9th, did not provide a timeline for the exit or an explanation of how they will treat the assets left behind – which, according to their last annual public filing in February, were valued at $4.06 billion.
The announcement expedited an on-going effort to evacuate employees from the region. Exxon Mobil operates three large offshore oil and gas fields on the behalf of a consortium of Japanese, Indian and Russian companies that include the Russian giant, Rosneft. Rosneft is controlled by the Russian government (aka Vladimir Putin). It is the leading Russian oil company and, according to Forbes Global 2000, it is the 53rd largest public company in the world. Their move has the affected Japanese and Indian consortium scrambling to decide what comes next.
Exxon Mobil’s Russian business is relatively small in the context of its overall operations. Regardless, walking away from 4 billion dollars speaks volumes about the company’s core values. Good for you Exxon Mobil, and the rest of the western companies who are taking a stand by putting people before profits!
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