Russian President Vladimir Putin has signed an amendment to a 2022 executive order, paving the way for foreign companies to return to the massive Sakhalin-1 oil and gas project. The policy shift, however, is contingent upon the lifting of international sanctions and the resumption of equipment supplies to Russia.
The Sakhalin-1 project holds vast reserves estimated at 2.3 billion barrels of oil and 17.1 trillion cubic feet (484 billion cubic meters) of gas. Its production collapsed from 220,000 barrels per day to a mere 10,000 after ExxonMobil’s withdrawal in 2022. The company’s return could not only revitalize this flagship project but also breathe life into other stalled Russian Arctic initiatives, such as the development of the Pobeda field in the Kara Sea.
However, the terms of any return will be starkly different from the original 1990s agreements. Russia has steadily tightened state control over strategic energy assets since 2006, when foreign investors in the Sakhalin-2 project were compelled to sell their stakes to Gazprom.
Ultimately, ExxonMobil’s decision will hinge on more than just economics. Experts caution that the company’s path back to Sakhalin is inextricably linked to Washington’s policy regarding the future of sanctions against Russia.