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Exxon Mobil has declared force majeure on its operations at the Sakhalin-1 project in offshore Russia, due to difficulty in shipping crude oil to customers, reported Reuters.
The increasing difficulty in crude shipping comes as a result of Western sanctions on Russia in the wake of its invasion of Ukraine.
Project partners, including Japan’s Sakhalin Oil and Gas Development consortium and Indian explorer ONGC Videsh, are facing difficulty in chartering vessels to ship crude oil.
Shipping companies are concerned over reputation risks and difficulties in finding insurance coverage for Russian assets.
King added: “As a result, Exxon Neftegas has curtailed crude oil production.”
The Sakhalin-1 project currently has an export capacity of approximately 273,000 barrels per day. It exports crude oil to South Korea, Japan, Australia, Thailand, and the US.
Exxon spokesperson Julie King was cited by the news agency as saying, in a written response, that the firm is working to exit the Russian project. It is also taking steps to address contractual and commercial obligations related to the project.
King added: “As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment, and integrity of operations.”
Exxon Mobil’s Russian subsidiary Exxon Neftegas operates the Sakhalin-1 project with a 30% stake.
Other partners include Rosneft affiliates RN-Astra (8.5%), Sakhalinmorneftegaz-Shelf (11.5%), Japan’s SODECO Consortium (30%), and ONGC Videsh (20%).
The project includes the Chayvo, Odoptu, and Arkutun-Dagi fields off the east coast of Sakhalin Island, Russia.
Last month, ExxonMobil announced plans to exit from its oil and gas assets, worth $4bn, and discontinue operations in Russia, including the Sakhalin-1 project, due to sanctions on Moscow.
The oil company reduced its Russian chemical and lubricant businesses and also suspended chemical and lubricant product sales to Russia and Belarus.