ExxonMobil suspends Russian LNG project
ExxonMobil (Exxon) has suspended its Far East liquefied natural gas project (LNG) in Russia – putting the development into doubt.
This follows the energy giant announcing it would exit its Russian oil and gas operations – valued at more than $4bn – last month
The divestment will see Exxon pull out of managing large oil and gas production facilities on Sakhalin Island in Russia’s Far East, and jeopardises the proposed multi-billion dollar LNG facility.
Prior to Russia’s invasion of Ukraine, Exxon had planned to build the Far East LNG project with annual capacity of more than 6m tonnes, as part of Sakhalin-1 consortium led by Russian energy giant Rosneft
Currently, Exxon has a 30 per cent stake in Sakhalin-1, Japan’s SODECO holds 30 per cent, Rosneft has 20 per cent and India’s ONGC holds 20 per cent.
The decision was slammed on Russian radio as a “shot in the foot” by Khabarovsk region’s governor Mikhail Degtyaryov.
He said: “The project that the Americans, Exxon, announced in the port of De-Kastri with a pipeline from Sakhalin, it’s been frozen until a further decision by them. Why this is being done astounds me, this is shooting oneself in the foot. There is gas, there’s a coast, there are labor resources and investment, but they’re freezing the project for political reasons,
The project’s fields have estimated reserves of 307m tonnes of oil and 485 bcm of natural gas.
Rivals firms such as Shell, BP and Equinor have also announced plans to exit the country – while TotalEnergies will not invest further in any of its Russian projects.
Countries are generally taking a more circumspect approach – with the EU split on imposing energy sanctions while Japan remains committed to its stake in the Sakhalin-2 project.
Last week, Prime Minister Fumio Kishida argued the project is essential to the country’s energy security.
He told parliament: “Japan has a stake in Sakhalin 2, which is contributing to securing long-term, stable and low-priced supply of LNG. It is an extremely important project for Japan’s energy security.”