When Exxon Mobil CEO Rex Tillerson detailed a $3.2 billion deal to drill for oil in Russia’s Arctic Sea two years ago, he predicted that the project would strengthen the ties between the U.S. and Russia. However, as WSJ reports, Exxon has instead wound up in the cross hairs of U.S. foreign policy, which could threaten one of the company’s best chances to find and tap significant — and much needed — amounts of crude oil. If the venture is significantly delayed or hampered, it would deal a blow to Exxon’s efforts to replenish its store of fuels it pumps from the ground. The company’s production has been essentially flat for years, and last quarter fell to the lowest level since 2009. More costs?
As WSJ reports,
The U.S. on Thursday announced new sanctions targeting Russia’s financial, defense and energy sectors in a bid to punish the Kremlin for stoking the military conflict in Ukraine. Details of the sanctions, designed to match new measures imposed by the European Union, are set to be released Friday.
A U.S. official said the new penalties would affect Exxon’s current drilling in the icy Kara Sea with its Kremlin-controlled partner, OAO Rosneft, though the extent of the impact was unclear Thursday.
No other Western energy company has as much direct exposure to Russia as Exxon, thanks to a $3.2 billion deal giving the company access to a swath of the Arctic larger than Texas that could hold the equivalent of billions of barrels of oil and gas.
Exxon is “assessing the sanctions,” said Alan Jeffers, a company spokesman. “It’s our policy to comply with all laws.”
If the venture is significantly delayed or hampered, it would deal a blow to Exxon’s efforts to replenish its store of fuels it pumps from the ground. The company’s production has been essentially flat for years, and last quarter fell to the lowest level since 2009.
Russia’s Arctic is one of the few regions in the world that could hold enough oil and gas to boost Exxon’s output.
We leave it Exxon Mobil’s CEO to conclude…
“We always encourage the people who are making those decisions to consider the very broad collateral damage of who are they really harming with sanctions.”