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Sep 19, 2014 1:55 PM

Exxon to wind down Russian drilling project

The Associated Press

NEW YORK (AP) Exxon Mobil said Friday that it will wind down a drilling project in Russia in compliance with U.S. sanctions, but said it received a license to keep working beyond the sanctions' deadline in order to complete the work.

U.S. sanctions against Russia over its involvement in the Ukraine require the removal of U.S. workers on projects in the Russian Arctic and other select locations by September 26.

Exxon is drilling an exploratory well in the Kara Sea in the Russian Arctic, and had planned to stop drilling in October in order to remove equipment and personnel before winter set in.

Exxon said it has received a license from the U.S. Treasury Department for more time to wind down operations safely and close up the project before winter "to ensure a safe and environmentally responsible completion," said Exxon spokesman Richard Keil. "The license is non-renewable and no further work is permitted."

Unless the sanctions remain in place for many more months, they are not expected to lead to a delay in the Kara Sea exploration project.

The project is part of a broad collaboration between Exxon and the Kremlin-controlled Rosneft, Russia's largest oil company. The two aim to explore for oil and gas in technically challenging formations in Russia.

These formations are thought to hold large troves of hydrocarbons, but producing oil from them requires the type of expertise found at western oil companies such as Exxon.

Even if successful, the projects aren't expected to result in new oil and gas production for several years. But they represent an important and possibly enormous resource that could help both Exxon and Russia keep oil production high as current fields naturally deplete.

Exxon shares were up 65 cents, to $97.26 per share in afternoon trading Friday.


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