MOSCOW. May 5 (Interfax) - ExxonMobil's exit from the Sakhalin-1 project in Russia will reduce the U.S. major's proven reserves by 150 million barrels of oil equivalent, the company reported.
This amounts to 1% of the company's total proven reserves of 18.5 billion boe as of the end of 2021.
The company announced on March 2 that it planned to pull out of Sakhalin-1 due to Russia's military operation in Ukraine.
ExxonMobil said it is taking a charge of $3.4 billion related to its Sakhalin-1 operation in the first quarter of 2022.
The fair value estimate required the use of source data and Level 3 allowances based on the opinion of a probable market participant; as of March 31, the pool of upstream market participants in Russia was very limited, the company said.
When determining the fair value of its stake in Sakhalin-1, the company took into account the current state of sanctions, the legal and regulatory framework in Russia, the statements and actions of potential market participants, as well as the range and risks of future cash flows that a market participant can consider. Given these significant uncertainties, the chances that a third-party market participant would agree to participate in the deal on behalf of the company in Sakhalin were deemed low as of March 31, ExxonMobil said.
Before impairment and other deductions, after-tax profit related to the company's stake in Sakhalin-1 amounted to about $200 million in the first quarter, and oil and gas production totaled about 65,000 boe per day, ExxonMobil said.
There were media reports earlier that Exxon Neftegas Ltd., the operator of the Sakhalin-1 project, had declared a force majeure and started to reduce oil production due to problems with operations and the sale of products amid sanctions.
The other participants in Sakhalin-1, which has estimated reserves of 307 million tonnes of oil and 485 billion cubic meters of natural gas, are Japan's SODECO with 30%, Rosneft with 20% and India's ONGC with 20%.