The head of Sakhalin announced a breakthrough in Exxon's return to Sakhalin-1.

Sakhalin Region Governor Valery Limarenko called the publication of the presidential decree that paved the way for ExxonMobil to return to Sakhalin-1 a "breakthrough." He believes the Americans' withdrawal from the project was a mistake.

Interview, Valery Limarenko (Video: RBC TV Channel) Video

The Sakhalin-1 project is beneficial for the United States and for ExxonMobil in particular, so the company's withdrawal from it was a mistake, Sakhalin Region Governor Valery Limarenko stated in an interview with the RBC television channel. He believes former US President Joe Biden violated the "economic logic of the American oil business."

In this regard, Limarenko drew attention to the decree signed by Russian President Vladimir Putin, which outlined the terms of Exxon's return to Sakhalin-1. According to him, the document marks a "breakthrough" on the issue. "Information was published that the presidents discussed this issue. I'm only getting my information from these sources. They discussed it. A decree was issued discussing preparations. That's my understanding. This means there's light at the end of the tunnel, and cooperation has begun, and so on," the regional governor explained.

Limarenko emphasized that Sakhalin is ready for peace and development. "And I want to tell you that if the presidents reach an agreement and Exxon returns, the cooperation that began a couple of decades ago will continue," he concluded.

A document supplementing the decree that transferred the Sakhalin-1 oil production project to Russian jurisdiction in 2022 was published on August 15, ahead of the Russian-US presidential summit in Alaska. The amendments defined the conditions under which a consortium member whose stake had previously been alienated by the government could rejoin.

The Sakhalin-1 project has been implemented under a production sharing agreement since 1996. It includes three fields on Sakhalin (Chaivo, Odoptu, and Arkutun-Dagi) with potential recoverable reserves of 307 million tons of oil and 485 billion cubic meters of gas. The project operator was previously Exxon Neftegaz Limited. ExxonMobil (usa) owned 30%, Rosneft (10%), Japan's Sodeco (30%), and India's ONGC Videsh (20%). However, in the fall of 2022, due to unfriendly actions by Western governments, the project was re-registered to a Russian legal entity, Sakhalin-1 LLC, based in Yuzhno-Sakhalinsk.

The only company to subsequently announce its withdrawal from the project was Exxon. In 2023, the Russian government approved rules for the valuation and sale of its unclaimed stake. The sales deadline has been extended several times, most recently at the end of 2024, when it was extended until January 1, 2026.

The amendments to the decree stipulate that the foreign investor must facilitate the lifting of sanctions that negatively impact the project. They are also required to enter into contracts for the supply of foreign-made equipment for Sakhalin-1. Furthermore, they must transfer funds previously accumulated in the liquidation account to the account of the new project operator, Sakhalin-1 LLC, either directly or through intermediaries.

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