The Texas based Oil Company, Exxon Mobil Corporation (NYSE:XOM), issued a statement saying that the U.S. government had issued them with an extension license allowing them to wind up drilling in the Russian arctic. Their operations now have to come to a halt after the U.S government issued sanctions on Russia due to their interventions in Ukraine.
“Following the short time extension, the license is non-renewable and no further work is permitted,”
Exxon Mobil Corporation (NYSE:XOM) spokesman Richard Keil told Reuters. This will give the company ample time to safely terminate their operations.
The sanctions by the U.S are being aimed at paralyzing oil drilling operations of the Russian government. The move will definitely see the relationship between the oil drilling companies in Russia and other European companies crumble.
Both the E.U and the United States has banned the financing of oil projects in Crimea, the peninsula once owned by Ukraine that is now appropriated by Russia. The ban boils down to prohibition of sale of machinery components used in exploration and production.
The Kara Sea and the region of the Siberia is considered one of the hardest parts to drill and exploit and this is why the president of Russia and the CEOs of major Russian oil companies like Rosneft know they are treading on thin ice without the aid of European oil companies. This is why, despite the current political situation, Vladimir Putin and Sechin, Rosneft CEO, are really fighting to have companies like Exxon Mobil Corporation (NYSE:XOM) stick around.
The move to have Exxon Mobil Corporation (NYSE:XOM) and other U.S corporations terminate their million dollar agreement with the Russian companies so as to paralyze energy production by Russia has so far been seen to have very minimal effect. With the president of Russia downplaying the sanction and stating that pragmatism and common sense will prevail among the international Cooperations.
This article has been written by Victor Ochieng.