Exxon announces force majeure on Russia's Sakhalin-1 project
The U.S. corporation ExxonMobil said on Wednesday, April 27, 2022, that its Russian subsidiary Exxon Neftegas had announced force majeure on the Sakhalin-1 project over sanctions against Russia amid a war that had disrupted Russian oil supplies to customers. This was reported by Reuters.
The Sakhalin-1 project produces Sokol crude oil off the coast of Sakhalin Island in Russia's Far East, exporting about 273,000 barrels a day, mostly to South Korea, but also to other countries, including Japan, Australia, Thailand and the United States.
Exxon said on March 1 that it would withdraw about $ 4 billion in assets and suspend all its operations in Russia, including Sakhalin-1, after Russia's invasion into Ukraine on February 24, 2022.
Project participants, which also include the Japanese consortium Sakhalin Oil and Gas Development and the Indian exploration company ONGC Videsh, have difficulty chartering oil tankers from a region that typically needs ice boats to navigate.
This is due to the growing concerns of shippers about reputational risks and growing difficulties for Russian assets in terms of insurance coverage. As a result, oil production has declined significantly.
Problems with the sale of Sokol oil also appeared with Chinese buyers. They are trying to abandon the Sokol brand due to sanctions against Sovcomflot, which transports raw materials from Sakhalin-1. Sovcomflot tankers also cannot obtain insurance from international companies.