Exclusive: Exxon signs initial agreement with Rosneft to chart possible path to recoup Russian losses, sources say
![Item 1 of 2 Exxon Mobil signage is displayed at the JEC World Composites Show at the Villepinte Exhibition Center, near Paris, France, March 4, 2025. REUTERS/Benoit Tessier/File Photo [1/2]Exxon Mobil signage is displayed at the JEC World Composites Show at the Villepinte Exhibition Center, near Paris, France, March 4, 2025. REUTERS/Benoit Tessier/File Photo Purchase Licensing Rights, opens new tab](/_next/image?url=https%3A%2F%2Fwww.reuters.com%2Fresizer%2Fv2%2FMD7LDYL66FOGHBTJJTHK2VSALQ.jpg%3Fauth%3D8989de2a3e6ffc02ec9e5c4262b27c901d75ac40abad2000b6eb21c34f8ab48c%26width%3D1200%26quality%3D80&w=1920&q=75)
News Summary
U.S. oil major Exxon Mobil and Russian state-run energy giant Rosneft have signed a non-binding initial agreement to help Exxon recoup a $4.6 billion write-down it made on its Russian activities in 2022 following Moscow's invasion of Ukraine. The agreement marks a tentative step toward repairing commercial relations between the two countries, though significant progress is unlikely until Moscow advances toward a peace deal in Ukraine and both the United States and the European Union relax sanctions on Russia. Rosneft initially declined to comment or denied signing a cooperation agreement when asked by Reuters, but did not respond to follow-up inquiries. Exxon CEO Darren Woods confirmed that talks to recoup losses have been ongoing since 2023, with permission from both the Trump administration and the former Biden administration. Signed in late August or early September, the agreement sets terms for talks that could lead to Exxon recouping the $4.6 billion write-down, but it is not legally binding. Russian Deputy Foreign Minister Sergei Ryabkov and Sakhalin island governor Valery Limarenko both indicated Moscow's readiness to deepen energy cooperation with the U.S. and welcomed Exxon's potential return. Other major Western oil companies, including BP and Shell, also took significant write-downs on their Russian assets.
Background
Following Russia's invasion of Ukraine in February 2022, many Western companies, including Exxon Mobil, announced their withdrawal from Russia in response to global condemnation and sanctions. Exxon took a $4.6 billion impairment charge on its 30% operator stake in the Sakhalin-1 oil and gas project off Russia's Pacific coast and stated it lost access to 150 million barrels of proven oil equivalent reserves. In retaliation for the freezing of approximately $300 billion in Russian assets by the U.S. and its allies, and the expropriation of Moscow's stakes in various Western companies, Russia also expropriated multiple Western assets between 2022 and 2023. The United States and the European Union have imposed multiple sanctions on Rosneft and its chief, Igor Sechin. Other major oil companies also incurred significant losses; for instance, BP took a hit of up to $25 billion for exiting its nearly 20% stake in Rosneft, while Shell took a $3.4 billion write-down on its stakes in the Sakhalin-2 LNG plant and Siberian oil fields.
In-Depth AI Insights
What are the strategic implications of the Trump administration facilitating Exxon's talks with Rosneft amidst ongoing sanctions? - This signals a potential shift in the Trump administration's foreign policy towards Russia, prioritizing commercial interests (especially in energy) over strict adherence to sanctions. - It could be a precursor to broader sanctions relief if peace talks advance, creating potential opportunities for U.S. companies. - The move also tests the unity and resolve of the Western alliance regarding sanctions on Russia. How might Russia's willingness to discuss energy cooperation, specifically on Sakhalin-1, impact its leverage in Ukraine peace negotiations? - Moscow is utilizing its energy assets as a bargaining chip. Offering Exxon a path to recoup losses could be a strategic move to entice U.S. economic engagement, potentially pressuring the U.S. to push Ukraine for a faster resolution. - This highlights Russia's long-term view of energy as a geopolitical tool. What are the risks and opportunities for other Western energy companies with significant write-downs in Russia, given Exxon's tentative agreement? - Opportunity: Exxon's path could set a precedent for other Western companies (e.g., BP, Shell) to explore similar recoupment or re-engagement strategies if sanctions ease. - Risk: Such re-engagement could be politically fraught, facing public backlash and potential U.S./EU resistance unless a definitive peace deal is achieved. It introduces a complex moral and financial dilemma for corporations.