ExxonMobil may reportedly regain possession of its shares in the Sakhalin-1 oil and gas project.
Russian Government Opens Door for ExxonMobil to Return to Sakhalin-1 Project
In a significant development, the Russian government has issued a decree on August 15, 2025, allowing foreign shareholders, including ExxonMobil, to reclaim their shares in the Sakhalin-1 project after its transfer to Russian jurisdiction. However, the return of foreign partners like ExxonMobil is contingent on meeting specific conditions.
The new legal framework, signed by Vladimir Putin, establishes that foreign investors must actively support the lifting of Western sanctions on the project's environment, enter into contracts for foreign-manufactured equipment essential for the project's operations, and transfer necessary funds to project accounts.
Previously, the Sakhalin-1 project was operated by a multinational consortium under a production sharing agreement (PSA), with ExxonMobil holding a 30% stake and acting as operator alongside partners from Russia, India, and Japan. However, following the transfer of Sakhalin-1 to Russian jurisdiction in October 2023, the operator became the Sakhalin-based LLC "Sakhalin-1," a Russian entity.
The new operator, LLC "Sakhalin-1," is now managed by a mix of shareholders, including AO "RN-Astra" (8.5%), a "daughter" of "Rosneft" named "Sakhalinmorneftegaz-shelf" (11.5%), the Russian government (80%), Japanese SODECO, Indian ONGC, and other unspecified shareholders.
The project is currently developing the Chaivo, Odoptu, and Arkutun-Dagi fields. The decree regarding the Sakhalin-1 project was published on August 15, 2023, and came into force on the same date.
It is important to note that the full reinstatement of foreign partners like ExxonMobil depends heavily on evolving international sanctions and diplomatic developments, particularly ongoing U.S. and EU sanctions on Russia. Because Sakhalin-1 operates in a sanctioned environment, Exxon’s reentry likely requires sanctions relief or exemptions that are tied to broader diplomatic negotiations.
In summary, foreign consortium members can potentially reacquire shares in Sakhalin-1 under strict conditions involving sanction relief and operational contracts for foreign equipment as per the August 15, 2025 decree. However, the full reinstatement depends heavily on evolving international sanctions and diplomatic developments.
[1] Russian Government Decree on Sakhalin-1 Project [2] Rosneft Announces New Operator for Sakhalin-1 Project [3] ExxonMobil Leaves Russia Amidst Sanctions [4] Sakhalin-1 Project Developing Chaivo, Odoptu, and Arkutun-Dagi Fields [5] Sakhalinmorneftegaz-shelf: A Rosneft Daughter Company
- The Russian Government Decree on August 15, 2025, allows for ExxonMobil's return to the Sakhalin-1 project, opening a possibility for the American energy company to reinvest in the business sector, specifically the finance aspect of the oil and gas project.
- To meet conditions for the reinstatement of foreign partners such as ExxonMobil, the project's business operations will require enterings into contracts for foreign-manufactured equipment critical for project operations, as stipulated in the Russian Government Decree.
