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Investing.com -- Exxon Mobil Corp (NYSE:XOM) has held confidential negotiations with Russian state energy giant Rosneft regarding a potential return to the Sakhalin-1 project, according to The Wall Street Journal, citing sources familiar with the discussions. The engagement comes more than two years after Exxon’s forced exit from Russia following Moscow’s invasion of Ukraine and subsequent Western sanctions.
The Journal reported that Exxon Senior Vice President Neil Chapman led the talks, with only a select group inside the U.S. oil major aware of the negotiations. The conversations revolved around Exxon rejoining the multibillion-dollar Arctic energy project if approvals from both Washington and Moscow could be secured as part of a potential Ukraine peace process.
Exxon executives also seemingly initiated contact with the U.S. government to probe openness to facilitating a return, including a recent meeting between CEO Darren Woods and former President Donald Trump. The meeting occurred amid a broader reassessment of U.S-Russia business engagement channels in the context of frozen energy assets and deteriorating geopolitical stability.
Negotiations reportedly began soon after Exxon’s 2022 exit, enabled by U.S. Treasury licenses that allowed for limited contact with Russian counterparts. Discussions gained urgency around Trump’s presidential campaign in early 2024, and in February Chapman met with Rosneft CEO Igor Sechin in Doha despite Sechin being under stringent U.S. sanctions.
Shortly after Trump met with Russian President Vladimir Putin in Alaska, the Kremlin issued a decree opening the door for foreign companies to re-enter the Sakhalin venture. Conditions for reentry include delivering external equipment, lobbying to lift sanctions, and participating in joint pressure on Western governments.
Exxon walked away from Sakhalin-1 amid rising international condemnation of Russia’s war in Ukraine, writing off over $4 billion in assets and declaring its 30% stake to be effectively seized by Moscow. Kremlin officials blocked any asset sale, terminating Exxon’s participation through presidential decree, which the company responded to by calling the move an expropriation.
Despite the rift, Exxon has quietly maintained informal ties with top Russian energy leaders throughout the conflict, according to sources cited in the report. The U.S. major is now seeking avenues to recoup its losses even if full reentry into Sakhalin remains elusive under current sanctions.
For Moscow, bringing back a prominent Western oil partner would serve both economic and symbolic goals as Russia’s energy infrastructure grapples with sanctions and stalled foreign investment. While Russian oil output has remained strong, Western analysts warn that declining expertise and limited technology imports could undermine output in the longer term.