Exxon estimates losses from planned Sakhalin-1 exit at $3.4 bln

MOSCOW. April 29 (Interfax) - U.S.-based ExxonMobil reported a loss of $3.4 billion loss in Q1 due to its exit from the Sakhalin-1 project, the company said in financial reporting.

"The company is discontinuing operations at Sakhalin-1 ("Sakhalin"). As the operator of Sakhalin, the company remains focused on human safety, environmental protection and the integrity of operations. In the first quarter, the company recorded $3.4 billion in expenses related to its investment in the project, which is reflected as an unfavorable identified item and mainly affects the exploration and production segment," the company .

Earlier ExxonMobil stated that it expects impairment of balance sheet assets totaling $4 billion due to withdrawal from the project. The share of Sakhalin-1 in 2021 was less than 2% of the company's total production - about 65,000 barrels of oil equivalent per day - and only about 1% of operating profit, ExxonMobil said in materials accompanying a videoconference with investors.

The company announced its plans to withdraw from the project on March 2, against the background of Russia's military operation in Ukraine. The Economic Times reported that Indian authorities suggested that ONGC Videsh consider buying Exxon Mobil's 30% stake in Sakhalin-1.

It was also reported in media that Exxon Neftegas Ltd. (the operator of the project) had declared a force majeure and began to reduce oil production due to complications and problems with product sales amid sanctions.

Other participants in the Sakhalin-1 project are SODECO (Japan) - 30%, Rosneft - 20%, and ONGC (India) - 20%. The total reserves of the project's fields are estimated at 307 million tonnes of oil and 485 billion cubic meters of natural gas.