Exxon-led Russian consortium to pay Rosneft $230 mn to settle dispute

Russia’s Sakhalin-1 consortium, led by ExxonMobil, has agreed to pay Russian energy giant Rosneft $230 million in an out-of-court settlement of an oil production dispute, an executive of an Indian consortium partner said on Friday.

Rosneft had filed a $1.4 billion lawsuit in the Sakhalin district arbitration court in Russia's far east, accusing the consortium of unjust enrichment, an allegation the consortium denied. The dispute centred around how oil should be shared between the Sakhalin-1 concession and an adjacent Rosneft field. “Rosneft was demanding that it should be paid $1.4 billion ... We have agreed for an out-of-court settlement and will be paying $230 million as Rosneft entered the other area in 2011,” N K Verma, managing director of India's ONGC Videsh, a partner in the Sakhalin-1 consortium, told Reuters.

Rosneft, which also has a stake in the Sakhalin-1 consortium, declined to comment. ExxonMobil in Moscow declined immediate comment.

“We don’t have anything we can share,” said Suann Guthrie, an ExxonMobil spokeswoman in the United States.

P K Rao, director for operations at ONGC Videsh, said the out-of-court settlement was reached about 10 days ago.

The row was over oil “cross-flows” from Northern Chayvo oilfield, controlled by Rosneft. Sakhalin-1, off Russia’s Pacific Ocean coast, is operated by Exxon Neftegaz, through which ExxonMobil owns 30 per cent in the project. Rosneft and ONGC control 20 per cent each. Japanese consortium Sodeco owns 30 per cent.

ONGC’s Verma said production at Sakhalin-1 reached 250,000 barrels per day (bpd), up from some 200,000 bpd, as Russia had lifted output restrictions as part of a global deal with OPEC. Reuters

Russia's total oil production hit a post-Soviet high of 11.347 million barrels per day this month.

The dispute between Rosneft and the Sakhalin-1 consortium unfolded against the background of a wider rift between Russia and the United States over what Washington called Moscow's meddling in a 2016 presidential election.

Exxon had to quit some joint projects with Rosneft, including developing Arctic oil and gas, over sanctions imposed on Russia by the United States. Participation in Sakhalin-1 is not punishable by sanctions.