Russia has begun discussions with Exxon Mobil Corp. on possible new oil and gas projects, potentially creating a dilemma as the U.S. government mulls more sanctions against the country. The talks could lead to increased cooperation between the U.S. energy giant and state-run Rosneft PJSC, Russian government officials said, asking not to be named discussing confidential information. Several options have been prepared for Exxon, including in natural gas, refining and chemicals, none of which are currently subject to American sanctions, two officials said.
Exxon abandoned most of its joint ventures with Rosneft earlier this year amid a previous round of sanctions. That was a blow for both companies: their agreements signed five years ago to drill millions of acres in the Arctic and Black Sea should have been the crowning achievement of Rex Tillerson’s 11-year tenure at the helm of Exxon. It would also have cemented the dominance of Rosneft boss Igor Sechin over Russia’s oil industry.
President Vladimir Putin personally blessed those ventures, foreseeing decades of exploration in the country’s richest and largely untapped offshore areas. After Exxon withdrew, Rosneft bought out its stakes in projects holding an estimated 12.3 billion tons of potential oil and condensate resources. Rosneft has said it would welcome Exxon back should it see an opportunity to do so without legal risks.
Meanwhile, the U.S. company is left with just one major operation in Russia — the Sakhalin-1 venture, which started more than a decade ago and pumps more than 200,000 barrels of crude a day. The potential offer of new projects is something Russia agreed on with Exxon in 2017 while settling a lengthy tax dispute at Sakhalin-1, two officials said.
The two companies resolved a separate dispute related to that project last month, which helped improve relations between Exxon and the Russian government though isn’t linked to the new offer of work, one of the officials said. Should the U.S. major go ahead with one of the new ventures, an agreement is possible before the end of the year, one official said.
The U.S. is considering more sanctions against Russia, potentially as soon as next month. A multitude of measures have been proposed as punishment for alleged election meddling and use of chemical weapons in the U.K. In August, Washington banned the export of certain “sensitive” goods and technologies to Russia, which could affect liquefied natural gas, refining or chemical projects.