Russian President Vladimir Putin has signed a decree, published on Oct. 7, to set up a new operator for the Sakhalin 1 oil and gas project, following similar steps to seize other oil and gas projects with foreign participation.
Exxon Mobil Corp., with a 30% stake, was the operator of Sakhalin-1, a development in Russia's Far East.
Earlier this year, Exxon Mobil took a $4.6 billion impairment charge for exiting the project, its largest investment in Russia, although its head of upstream operations said on Oct. 4 it was still working with its partners on its exit.
The Russian company Rosneft is a partner in the project along with ONGC Videsh, the overseas investment arm of India’s ONGC, and Japan’s SODECO.
The decree said the Russian government was setting up a new Russian limited liability company, which would own the investors’ rights, including the operator’s rights of Exxon Neftegaz Ltd.
It said the foreign partners should apply to the government within a month after the new company is set up, to notify it of their agreement to take up shares in the new entity in accordance with their stakes in the previous company.
The Rosneft subsidiary Sakhalinmorneftegaz-shelf is appointed as the manager of the new company.
Russia said in July that oil production at the Sakhalin-1 project had fallen to just 10,000 bbl/d from 220,000 bbl/d due to sanctions imposed on Moscow by Western powers over its military campaign in Ukraine.
Putin also signed a decree in July seizing full control of Sakhalin-2, another gas and oil project in Russia's far east created on the basis of a production-sharing agreement signed in 1990s.
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