ExxonMobil is pulling out of a joint venture with Russian oil company Rosneft because of U.S. sanctions against Russia.
The move, disclosed in a company filing Wednesday, will cost ExxonMobil about $200 million. It also will also undo one of the crowning achievements of former ExxonMobil CEO Rex Tillerson, who is now U.S. Secretary of State.
The joint venture was formed in a series of agreements in 2013 and 2014. The companies were focused on drilling for oil in three key Russian regions: the Arctic, the deepwaters of the Black Sea, and Siberia. The partnership also gave Rosneft the chance to get a stake in Exxon’s North American projects, including ones in West Texas and in the deep waters of the Gulf of Mexico.
Russian President Vladimir Putin awarded Tillerson the Order of Friendship, one of the highest honors Russia gives to foreign citizens, in 2013 as a result of the negotiations.
But sanctions were imposed on the Russian energy sector in 2014 by the European Union and United States in response to Russia’s annexation of the Crimea region of Ukraine. In the latter half of 2017, the United States codified and expanded sanctions against Russia related to Russia’s interference in the 2016 U.S. election.
Last July, the U.S. Treasury Department also slapped ExxonMobil with a $2 million fine — the maximum allowed under the law — after finding it blatantly violated the U.S. sanctions while Tillerson led the oil company. ExxonMobil denies that finding, stating in the filing it always complied with the sanctions. It said that it decided to withdraw from the joint venture “in late 2017,” and it expects to “formally initiate the withdrawal in 2018.”