Putin bans some firms from exiting Russia
President Vladimir Putin tightened his control over two key sectors of the Russian economy with a decree that bans some foreign banks and energy companies, including Exxon Mobil Corp., from exiting their businesses in the country.
Exxon and other foreign shareholders in the Sakhalin-1 oil field won’t be allowed to dispose of their holdings until yearend as part of measures “to protect national interests,” according to a decree published on Russia’s legal database. The decree comes just days after Exxon said it was in talks to move its 30 percent stake in Sakhalin-1 to an unnamed entity.
The decree also orders the nation’s government to prepare a list of other energy companies and banks with foreign shareholders that may be subject to the same restrictions.
International companies — from energy producers to makers of consumer goods and electronics — have been pulling out of Russia or suspending their operations since the invasion of Ukraine. While sanctions and financial restrictions imposed both by the Kremlin and other nations are making it harder to conduct business, companies are also concerned about potential backlash over being seen as supporting the Russian economy during the war.
Some banks have said they are evaluating the option of leaving the country because of the invasion. Russian officials have threatened to block any such moves, saying the nation’s banks are not treated fairly abroad. Many foreign bank units still remain in Russia, including UniCredit SpA, Raiffeisen Bank International AG and Citigroup Inc.
Citigroup Inc. said last month that it’s considering a “full range of possibilities” on leaving Russia. Raiffeisen has said that exiting the country is one of its options.
Exxon operated the Sakhalin-1 field, which was regarded in Russia as an engineering marvel when it first started pumping in 2005. The project produced about 227,000 barrels a day last year, using two ice breakers to maintain exports even when the sea freezes over in winter.
Oil production there has been practically halted since May 15 due to Exxon’s decision to withdraw from the project, Rosneft PJSC said earlier this week. There have been no crude exports from the De Kastri terminal, which serves Sakhalin-1, since the start of June, according to tanker-tracking data monitored by Bloomberg.
Rosneft, which holds 20 percent of the project, said it had no information on Exxon’s talks to exit Sakhalin-1, indicating it was not party to those negotiations.
Russia and the project’s other foreign shareholders are taking steps to restore output, according to Rosneft. Japan’s SODECO holds another 30 percent in the project, and India’s ONGC Videsh Ltd. has the remaining 20 percent.
Putin’s decree imposes the same limitations on the smaller Kharyaga oil project and range of other Russian assets owned or co-owned by firms from the so-called “unfriendly nations,” which include the US, Japan and most European countries.
Kharyaga, located in in West Siberia, is much smaller than Sakhalin-1, pumping about 31,000 barrels a day last year. France’s TotalEnergies SE and Norway’s Equinor ASA have said they would exit the field.