Exxon Abandons Russian Projects Brokered by Tillerson

03/01/18 04:52 AM EST
By Michael Amon 

Exxon Mobil Corp. is ending projects with Russia's state-controlled energy giant, PAO Rosneft, because of international sanctions on Moscow, abandoning signature achievements of former chief executive, Secretary of State Rex Tillerson.

Exxon said it decided last year to withdraw after the U.S. government imposed new sanctions on Moscow for its alleged interference in the 2016 presidential election. Those penalties came on top of U.S. and European sanctions on Russia over its actions in Ukraine.

The withdrawal for now marks the end of Exxon's hopes of drilling in Russia's Arctic ocean oil fields, considered one of the world's great unexplored oil and gas basins. Exxon drilled one exploration well that it said produced promising results, but had to halt work because of sanctions. Exxon had hoped drilling could restart in the future, either with the blessing of the Trump administration or the eventual lifting of sanctions.

Mr. Tillerson had clinched those deals in 2011 and 2012, arrangements that were overseen personally by President Vladimir Putin. Mr. Tillerson later received the Order of Friendship, the highest honor Russia can bestow on a foreigner.

Exxon's involvement in Russia drew condemnation from the U.S. government, as the deals came at the height of the crisis over Moscow's involvement in Ukraine, including its annexation of Crimea.

The U.S. Treasury Department last year imposed a $2 million fine on Exxon for what it called a "reckless disregard" of American sanctions on Russia while Mr. Tillerson was chief executive. The deals were signed by a Putin confidant, Rosneft Chief Executive Igor Sechin, who was targeted by sanctions.

Exxon called the fine "outrageous," saying it was contrary to guidance given by the Obama administration. The company has challenged the fine in federal court.

President Donald Trump also dealt Exxon's Russian ambitions a blow last year, declining to waive sanctions for the company's Rosneft ventures.

Exxon announced the end of the joint ventures in a regulatory filing late Wednesday. It said it would formally begin to withdraw from the Rosneft joint ventures this year, taking a $200 million loss on them after taxes.

Write to Michael Amon at michael.amon@wsj.com


(END) Dow Jones Newswires

March 01, 2018 04:52 ET (09:52 GMT)

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