Russia approves rules for selling Sakhalin-1 stake unclaimed by Exxon

MOSCOW. Oct 2 (Interfax) - The Russian government approved the rules for appraising and selling a stake in Sakhalin-1 LLC on September 28.

Under the relevant resolution, a copy of which was obtained by Interfax, the Energy Ministry will commission B1-Consult LLC to do the appraisal. The independent appraiser will then prepare a report and have it reviewed by a self-regulating association of appraisers to confirm the results of the valuation. The appraiser's services will be paid for by the buyer of the Sakhalin-1 stake.

The Energy Ministry must submit the report and the association's opinion to the Federal Property Agency within five days of receiving them. The Property Agency will then have 20 to vet the documents for compliance with appraisal standards and send its conclusion back to the ministry. After this, the ministry will have three days to prepare a draft decision to confirm the valuation and submit it to the government.

After the government decision to confirm the appraisal goes into effect, the Property Agency will see to the sale of the stake. For this purpose, a tender will be held among Russian legal entities that meet criteria set by the government.

The starting price of the Sakhalin-1 stake will be the amount cited in the appraisal. If on the day preceding the tender only one bid is submitted or accepted for participation, the tender will not go ahead. The only bidder will be declared the winner at the starting price of the stake.

The Property Agency will then have three days from the date that the winner is determined to submit a draft government act to confirm the sale price of the stake, designate the entity to which this stake will be sold and enter into a purchase-sale contract.

After this act goes into effect and the winner pays for the services of the independent appraiser, the purchase-sale contract will be signed.

In October 2022, President Vladimir Putin signed order No. 723 on "additional special economic measures in the fuel and energy..." to replace the operator of the Sakhalin-1 oil and gas project, Exxon Neftegas Limited, with Russian company Sakhalin-1 LLC and to transfer to this company all of the rights and obligations of the consortium of investors set out in the production sharing agreement (PSA) under which the project is being implemented.

A stake of 11.5% in the new company was allocated to Sakhalinmorneftegaz-Shelf LLC(in proportion to its stake in the PSA) and 8.5% went to JSC RN-Astra. The foreign participants in the PSA were given a month to confirm their agreement to receive proportionate stakes in the new operator, and Japan's SODECO (30%) and India's ONGC (20%) did so.

But Exxon Mobil announced its exit from the project and Russia in general. Exxon's unclaimed stake will be appraised and subsequently sold to a Russian company.