Exxon Mobil Corp., the biggest oil company by market value, will have to bid for new oil and gas reserves as a minority shareholder to expand output off Sakhalin Island as Russia tightens control of its resource wealth.
Russia rejected Exxon Mobil Corp.'s request to expand its Sakhalin-1 contract automatically to include new discoveries, the Natural Resources Ministry said yesterday in an e-mailed statement after a meeting between Deputy Minister Alexei Varlamov and the head of Exxon Mobil's Russian unit, Ben Haynes.
Existing fields at the project reached a target peak production level this year. Russia is moving to restrict foreign ownership in offshore oil and gas projects, like those around Sakhalin Island, to less than half to ensure control of so-called „strategic” resources. Royal Dutch Shell Plc and its Japanese partners agreed last year to sell to state-run OAO Gazprom half of their Sakhalin-2 project, after months of pressure from regulators.
Nearby Sakhalin-3 fields may be auctioned off by the end of the year, Varlamov said. The timing will depend on when amendments to the subsoil resources law setting out ownership restrictions are passed into law, he said. Exxon and Chevron Corp. lost exploration rights at Sakhalin-3, won in 1993, because they delayed work while seeking long-term taxation agreements.
OAO Rosneft, Russia's state-controlled oil company, holds a 20% stake in the $17 billion Sakhalin-1 project, while Exxon holds 30% and India's Oil & Natural Gas Corp. Holds the rest. Output reached its target peak production rate of 250,000 barrels of oil a day, Exxon Mobil said February 13. (Bloomberg)