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Exxon's Moves Against Russian Sanctions
Now That's A Lot of Rubles
Assuming he is confirmed as U.S. Secretary of State, Rex Tillerson will almost immediately begin a process of rolling back sanctions against Russia. And the megalith he runs has been active behind the scenes in making this happen.
Tillerson is still technically CEO of international energy major ExxonMobil until the Senate confirms his cabinet appointment. There is bi-partisan senatorial opposition to that appointment brewing and the Russia card is already one of the main reasons why.
The political maelstrom surrounding President-elect Donald Trump's refusal to hold Moscow culpable in the election/political party hacking scandal is about to engulf the Tillerson appointment. That confirmation process is about to act like the proverbial "other shoe" falling.
Several years ago, ExxonMobil and Russian state oil major Rosneft signed a joint development agreement. That accord put Exxon on the northern Russian continental shelf and in Black Sea development. But what it gave to Rosneft was far more important. In addition to needed access to Exxon's expertise and deep pockets, it provided the Kremlin with something much more important - high-end technology for heavy oil recovery.
The accord provided that the two companies would combine work at projects both inside and outside Russia. The strategic pairing provides Rosneft with access as a minority partner to Exxon projects in North America and elsewhere. Every one of the more than two dozen Exxon projects earmarked by the Russian major are heavy oil. Additionally, Exxon agreed to move into heavy oil projects in Western Siberia, the single most important domestic target for Russian energy officials.
By the time U.S. and European sanctions hit over Moscow moving into Ukraine, Exxon had committed more than $1 billion to fields inside Russia. The ultimate company exposure could easily move north of $3 billion.
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