Vladimir Putin signed a decree on 15 August that could enable foreign investors, including US oil major Exxon Mobil, to reclaim their shares in the Sakhalin-1 oil and gas project.
Despite nearly three hours of talks, Putin did not commit to pausing the hostilities, and Russian forces attacked Ukraine during the meeting. The talks notably excluded Ukraine’s President Zelenskyy and key European leaders, drawing criticism about the lack of Kyiv’s involvement. Meanwhile, Trump emphasized that the next steps depend on Zelenskyy accepting the proposals discussed and indicated that he would meet Zelenskyy in Washington to discuss how to end the war.
Friday’s announcement serves as a follow-up to Putin’s October 2022 decree that ordered the seizure of the Sakhalin-1 project, Reuters reports.
Exxon previously operated a 30% stake in the project and remains the only non-Russian investor to have exited its position. Other partners—India’s ONGC Videsh and Japan’s SODECO—kept their shares. Only Exxon walked away.
But here’s the catch: Exxon would need to actively work against the very sanctions that pushed it out. The decree requires foreign shareholders to “undertake actions to support the lifting of Western sanctions” if they want back in.
That’s a tall order. Exxon took a $4.6 billion hit to exit Russia after the February 2022 full-scale invasion. Would the company spend resources lobbying against US policy for a project the Kremlin seized?
The mechanics get messier. Foreign investors must also secure contracts for foreign-made equipment and transfer funds to project accounts. Three years after comprehensive sanctions, that equipment pipeline barely exists.
Can Trump deliver? His team has reportedly identified sanctions they could lift quickly with progress on Ukraine. Sakhalin-1 itself hasn’t been directly sanctioned, creating potential wiggle room.
Russia extended the sale deadline for Exxon’s unclaimed stake until 2026 last December. Translation: Moscow still wants that American expertise and technology.
The economics are stark. Russian oil prices have collapsed from $100 to $55 per barrel since the full-scale war began. Budget revenues have plummeted. Russia’s National Welfare Fund could run dry by late 2025, experts estimate.
Oil and gas revenues have been a crucial source of cash for the Kremlin, accounting for a quarter of total federal budget proceeds.
Earlier, Trump also publicly needled Putin about Russia’s economic struggles, saying the Russian leader should focus on rebuilding his country’s finances rather than fighting wars.
The question remains whether any Western company would risk reputational damage to re-enter Russia while the war continues. For now, Putin has opened the door. Whether anyone walks through it depends on factors far beyond oil prices.