ExxonMobil says Russia sanctions could cost it $1b

Company says the big drop in oil prices in 2014 is typical of the energy market

ExxonMobil said Thursday that US and European Union sanctions against Russia could cost the US oil giant as much as $1 billion (Dh3.67 billion).

Exxon “wound down” last year a number of prohibited joint venture activities with Russian oil major Rosneft in the Black Sea, Arctic regions and onshore western Siberia, the company said in its annual report to regulators.

The “maximum exposure to loss” from these joint ventures was $1 billion at the end of 2014, the report said.

US sanctions targeted Rosneft, as well as Rosneft president Igor Sechin, a confidant of Russian President Vladimir Putin. The sanctions included a ban on providing certain oil equipment and services, such as for drilling in offshore projects in deep water, in the Arctic, or in shale well drilling.

The US and EU imposed the sanctions over the conflict in Ukraine, accusing Moscow of backing the separatists fighting Kiev government troops in the country’s industrial east.

Exxon was forced to abandon its joint venture with Rosneft for exploration drilling in the Kara Sea, off northern Siberia, an area estimated to hold 87 billion barrels of oil.

Rosneft announced in September it had discovered oil in the Kara project.

Elsewhere in the annual report, Exxon characterised the big drop in oil prices in 2014 as typical of the energy market, which has “a history of significant price volatility”.

The company cited projections that global oil demand will rise about 30 per cent between 2010 and 2040.

Shares of Dow member Exxon were down 1.0 per cent at midday Thursday on the New York Stock Exchange.