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Exiting Russia Easier Said Than Done for IOCs

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Most Western oil majors announced plans to withdraw from Russia nearly two months ago, but the task appears easier said than done. First-quarter results, to be announced in coming weeks, could cast some light on next steps and how financially painful their exits may be. But it is already clear that the process of withdrawal will be slow and uneven for several reasons, including safety, security of supply, opportunism and mounting Western sanctions on Moscow that make swift transactions for big assets difficult. Shell has started demobilizing seconded employees in its joint ventures with Gazprom and Gazprom Neft. But it also continues to lift some blended Russian crudes so long as the Russian concentration is less than 50%. Sources say Exxon Mobil's withdrawal from the Sakhalin-1 project on the Russian Pacific shelf could be slow for safety reasons. Experts also say that if operator Exxon makes a rapid exit and wells at the 210,000 barrel per day Sakhalin-1 are shut down immediately, it would be nearly impossible to get them back on line given the area's harsh conditions. Meanwhile, Exxon continues to handle Sakhalin-1's Sokol crude from the Far East De Kastri port. Shell, which is a participant in the neighboring Sakhalin-2 project led by Gazprom, also cites the "safety of our people and operations and compliance with applicable laws," which means the demobilization of its staff from Russia will be "phased out." BP says it will have more information "on the charges we will take associated with the decision" to withdraw from Russia in its first-quarter results, to be released on May 3.

Topics:
Sanctions, Earnings, Majors, M&A
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