Americans show no immediate plans for Sakhalin.
In a significant development, ExxonMobil, a former participant in the Sakhalin-1 project, is currently engaged in talks with Russian authorities to recover $4.6 billion worth of lost assets. The project, located on the northeastern shelf of Sakhalin Island, involves the development of three marine fields: Chayvo, Odoptu, and Arkutun-Dagi.
The Sakhalin-1 project, signed in 1995, saw ExxonMobil become one of the largest shareholders with a 30% stake. However, after Russian President Vladimir Putin signed a decree in October 2022, ExxonMobil became the only foreign partner to leave the project. Production at the site decreased by 22 times after ExxonMobil's departure, to 10,000 barrels per day.
The current negotiation partner of ExxonMobil in the negotiations to recover lost assets worth $4.6 billion in Russia has not been publicly disclosed. Natalia Strelkova, a consultant at the law firm "Kamenskaya & Partners", suggests that cross-border disputes, such as the one between ExxonMobil and Russian authorities, are often resolved in international arbitration courts like ICC, SCC, or LCIA.
Artem Kopylov, partner at the law firm Pen & Paper, notes that the chances of Russia voluntarily complying with a court decision are close to zero, and enforcing it through Russia's or related structures' assets is fraught with difficulties. Elena Kozina, managing partner of "ELKО profi", believes that ExxonMobil's public statements indicate a strategy in international arbitration, where the company is not abandoning its claims and is considering negotiations only in the context of resolving the dispute over compensation, not returning to operational activities in Russia.
According to Elena Kozina, the chances of ExxonMobil winning in court are high, but the process could take several years. In 2023, hydrocarbon production on the project increased by 37%, to 11.3 million tons, matching the 2021 level. Governor of the Sakhalin region, Valery Limarenko, stated that the return of ExxonMobil to the project would give a boost to the development of the oil and gas industry in Sakhalin.
The potential recoverable reserves for the Sakhalin-1 project are 307 million tons of oil and 485 billion cubic meters of gas. The Ministry of Energy declined to comment on the talks between ExxonMobil and Russian authorities regarding the recovery of lost assets. As the negotiations continue, the outcome could have significant implications for the future of the Sakhalin-1 project and the broader energy landscape in Russia.
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