Exxon Mobil is complying with all U.S. sanctions against Russia, but they are certainly not going out of their way to appear patriotic about it.
Exxon is America's second-largest company and one of the largest oil companies in the world. They have numerous dealings with all of the world's major players in oil, including Russia's Rosneft, which is lead by the recently sanctioned Igor Sechin. On a conference call with investors and analysts on Thursday morning, David Rosenthal, Exxon's head of investor relations in the United States, said that Exxon plans to comply with all U.S. and European Union sanctions against Russia.
As the sanctions are currently written, Sechin is barred from entering the United States, but U.S. companies can continue working with his company, Rosneft, from afar. The sanctions are deliberately vague, and even a bit confusing. One U.S. Treasury spokeswoman said "U.S. persons cannot do business with sanctioned people or entities," though another clarified the "U.S. companies can still do business with Rosneft." Just not their CEO, somehow.
Exxon noted that "expansion projects planned in Russia for this year are proceeding normally." One of the largest projects is the drilling of the Russian Arctic Kara Sea, which has thus far cost Exxon $600 million (more than triple the norm.) The estimated return, however, is $900 billion based on the current price of oil, as the drilling should bring in nine billion barrels of oil.
This project is the pinnacle of Exxon's partnership with Rosneft, though the two have also worked together on shale exploration in Siberia and oil fields in Texas. The drilling of the Kara Sea is scheduled for August.
Without doubt, Exxon is currently lobbying in Washington and (as much as it can) in Moscow to make sure the deal goes forward. With $900 billion on the line, both companies — and the nations they are based in — have a financial interest in seeing the deal complete. Because the drilling is on Russian soil, Exxon will front the costs for the exploration and the research facility, which are expected to cost $3.2 billion and $450 billion respectively.
On April 25th, Patrick McGinn, a spokesman for Exxon’s exploration arm, said the company’s Kara Sea project was on schedule. Since Sechin was sanctioned, he declined to make any additional comments. Rosneft comforted shareholders by assuring them "Our cooperation won't suffer", and that all "shareholders and partners, including those in America" will not be hurt by these sanctions. In the event that the United States sanctions Rosneft directly, the oil trade will come to a screeching halt. The threat of this sanction is America's main weapon against Russia, though it is unlikely it will be deployed unless Russia invades Ukraine with a full standing military force.
Unless sanctions explicitly prevent Exxon from working with Rosneft, expect to see business as usual. Exxon will not stop or slow down its lucrative deals as a show of patriotism. As Exxon's former CEO Lee Raymond once put it, “I’m not a U.S. company, and I don’t make decisions based on what’s good for the U.S.”
This article is from the archive of our partner The Wire.