Oil and gas giant Exxon Mobil (XOM) held confidential talks with Russia’s largest state energy company Rosneft about returning to the massive Sakhalin-1 oil project, The Wall Street Journal reported. Further, Exxon CEO Darren Woods reportedly discussed the company’s possible return to Russia with President Donald Trump at the White House in recent weeks.
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Reuters had earlier reported that the U.S. and Russian governments discussed several energy deals, including the possible re-entry of Exxon into the Sakhalin-1 project, on the sidelines of negotiations this month aimed at achieving peace in Ukraine.
Exxon had a 30% stake in the Sakhalin-1 project, alongside Rosneft and partners from Japan and India. The company wound down its Russian operations under intense pressure when Russia attacked Ukraine in 2022. Russia blocked the sale of Exxon’s stake, leading to the company recording a $4 billion impairment charge.
Exxon Attempts to Re-Enter Russia
According to The Wall Street Journal report, Exxon Senior Vice President Neil Chapman held talks with Rosneft CEO Igor Sechin in Doha, Qatar, with only a select group inside the U.S. oil company aware of the discussions. The talks focused on Exxon rejoining the lucrative Sakhalin-1 energy project. The move will depend on approvals from both the U.S. and Russia as part of the Ukraine peace process.
In fact, negotiations about Exxon’s re-entry commenced soon after the company’s exit in 2022, once it secured permission and licenses from the U.S. Treasury Department to hold talks about stranded assets with Russian counterparts. Notably, the talks intensified around the time of Trump’s inauguration in January.
Interestingly, shortly after the recently held meeting between Trump and Russian President Vladimir Putin in Alaska, the Kremlin removed one hurdle to Exxon’s re-entry by signing a decree allowing foreign companies to once again own shares in the Sakhalin-1 project. However, the decree is subject to certain conditions, including providing overseas equipment and spare parts and lobbying for Western sanctions to be repealed.
Is Exxon a Buy, Sell, or Hold?
Given the ongoing macro challenges, Wall Street has a Moderate Buy consensus rating on Exxon Mobil stock based on 12 Buys and seven Holds. The average XOM stock price target of $125.32 indicates 12.4% upside potential from current levels.
