Exxon, Russia in Secret Talks

“After huddling with President Trump in Alaska, President Vladimir Putin told reporters that Russia and the U.S. could do more business together -- for example, between their Pacific coastlines.

 

"We look forward to dealing," Trump replied.

 

What the two leaders didn't say: Behind closed doors, their countries' biggest energy companies had already sketched out a map to going back into business, pumping oil and gas off Russia's far-east coast.

 

In secret talks with Russia's biggest state energy company this year, a senior Exxon Mobil executive discussed returning to the massive Sakhalin project if the two governments gave the green light as part of a Ukraine peace process, people familiar with the discussions said.

 

Such is the sensitivity that only a handful of people at Exxon knew of the talks. A top executive, Senior Vice President Neil Chapman, led the talks on the Exxon side.

 

Under the Biden and Trump administrations, Exxon and other companies have had U.S. permission and licenses from the Treasury Department to hold talks about stranded assets with Russian counterparts, one of the people familiar with the discussions said. The first round took place shortly after Exxon's exit from Russia in 2022.

 

In parallel, Exxon executives have asked the U.S. government for support if the company goes back to Russia and received a sympathetic hearing, a senior administration official said. CEO Darren Woods discussed Exxon's possible return with Trump at the White House in recent weeks.

 

Resuming business in Russia would mark a dramatic rapprochement after a messy breakup when events in Ukraine started in 2022. The West's biggest oil producer dived deeper into Russia than most other companies after the fall of the Soviet Union. Its retreat after the invasion was correspondingly more acrimonious.

 

Sakhalin-1, first agreed to in 1995, was one of Exxon's biggest investments. It ran the venture, and owned 30% alongside state-owned Rosneft and Japanese and Indian companies, which are still there.

 

When Western businesses stampeded out of Russia after the conflict start, Exxon reduced output and said it would sell its stake, writing down its value by more than $4 billion. Moscow blocked a sale, then wiped out Exxon's stake.

 

Enticing Exxon back would represent a coup for the Kremlin, which wants to draw Western investment as part of the peace talks to stabilize the economy. A return isn't guaranteed and depends in part on whether Trump, a Republican, succeeds in brokering an end to the Ukraine conflict.

 

Russia's oil industry has managed to keep production high despite sanctions, but analysts said lack of know-how and investment will eventually erode capacity. Ukrainian drone strikes on refineries and pipelines have cut into the country's domestic fuel supplies in recent weeks.

 

Discussions between Exxon and Rosneft intensified around the time of Trump's inauguration this January. In February, senior U.S. and Russian government officials met publicly in Riyadh, Saudi Arabia, to open talks about ending the conflict. Russia dangled the promise of investment opportunities for U.S. companies, including in Arctic energy developments.

 

Privately, Exxon's Chapman met Rosneft CEO Igor Sechin in the Qatari capital, Doha, some of the people familiar with the discussions said. Sechin, a close ally of Putin, is under blocking sanctions by the U.S., which means Americans are mostly banned from dealing with him without the type of Treasury license obtained by Exxon.

 

Qatar, whose sovereign-wealth fund has a stake in Rosneft, has carved out a role as a neutral mediator in global conflicts.

 

Reuters earlier reported that U.S. and Russian government officials discussed energy deals this month including Exxon's possible return.

 

There is a template for Exxon to get involved at Sakhalin: the production-sharing deal the consortium struck with the Russian government in the 1990s. Exports from Sakhalin mostly go to Asian buyers, who kept buying Russian crude after the conflict start.

 

Putin removed one obstacle to Exxon's return the same day as the Alaska summit. He signed a decree allowing foreign companies to own shares in the Russian firm that has operated Sakhalin since Exxon's departure. Conditions include providing overseas equipment and spare parts, and lobbying for sanctions to be repealed.

 

Exxon's return will likely depend on the terms that Russia offers. The company is looking to recoup losses from its Sakhalin exit, at least, some of the people familiar with the discussions said.

 

Exxon's close ties with Russia earned then-CEO Rex Tillerson an Order of Friendship from Putin in 2013. Sanctions imposed after events in Crimea the next year forced Exxon out of some of its Russian ventures, but Sakhalin was unscathed.

 

Despite the tension after the 2022 events, Exxon has maintained back-channel communications with Rosneft, some of the people familiar with the discussions said.

 

Russia's energy riches remain a big prize. When Exxon left, Sakhalin accounted for about 3% of its oil production, a small but proven source. It was also working with Rosneft to develop its natural-gas reserves.

 

Rosneft hopes to benefit from Exxon's capital, technology and managerial expertise, one of the people said.

 

If it goes back, Exxon would find a different environment. The Kremlin has taken even greater control of the energy industry.

 

The market for Russia's oil has changed. Europe has weaned itself off Russian crude, while India and China have snapped it up. Traders buy and sell mostly through opaque companies in the United Arab Emirates.

 

Trump soured on Putin this spring, icing any immediate prospect of Western businesses' diving back in, until he appeared to warm to him again in Alaska this month.” [1]

 

1. Exxon, Russia in Secret Talks, Wallace, Joe; Paris, Costas; Leary, Alex; Eaton, Collin.  Wall Street Journal, Eastern edition; New York, N.Y.. 27 Aug 2025: A1.