On August 27, 2025, the international energy landscape was shaken by news that Exxon Mobil, the American oil giant, is in advanced talks to re-enter the Russian market—specifically, the Sakhalin-1 oil and gas project off Russia’s far-east coast. The development, first reported by The Wall Street Journal and subsequently confirmed by Reuters, comes after years of strained relations and bruising economic sanctions triggered by Russia’s invasion of Ukraine in 2022.
Exxon’s history with the Sakhalin-1 project is long and complicated. The company had held a 30% stake in the venture since 1995, partnering with Russia’s state-controlled Rosneft and several Japanese and Indian firms who, notably, never left. But that partnership came to a grinding halt in 2022, when the Kremlin’s invasion of Ukraine prompted a mass exodus of Western companies from Russia. Exxon’s exit was messy: after trying to sell its stake, the company was blocked by Moscow, which then wiped out Exxon’s share completely. The company ended up writing down over $4 billion (by some accounts, $4.6 billion) in losses and accused Russia of expropriation.
Now, just over three years later, Exxon appears poised for a dramatic return. According to Reuters, the catalyst for this shift was a series of high-level discussions between U.S. and Russian officials, held in the context of broader negotiations aimed at achieving peace in Ukraine. These talks, which included a summit in Alaska on August 15, 2025, saw former U.S. President Donald Trump and Russian President Vladimir Putin publicly expressing a willingness to do more business together. It was during these meetings that Putin signed a decree allowing foreign companies to regain shares in the Russian entity operating Sakhalin-1—a move widely interpreted as a direct invitation to Exxon and other Western firms to come back.
But Russia’s offer comes with strings attached. The Kremlin has stipulated that any foreign company wishing to return must provide overseas equipment and spare parts critical for Russia’s energy sector, and, perhaps more controversially, must actively advocate for the repeal of Western sanctions that have crippled Russia’s economy and energy trade. The conditions are strict, but Exxon’s leadership appears willing to negotiate. According to The Wall Street Journal, Exxon’s Senior Vice-President Neil Chapman has been leading the talks with Rosneft CEO Igor Sechin, a close ally of Putin. Meanwhile, Exxon CEO Darren Woods has reportedly discussed the company’s possible return with Trump, who has been receptive to the idea.
These negotiations are part of a broader package of potential deals discussed between the two governments. As Reuters detailed, U.S. and Russian officials also explored the possibility of Russia purchasing U.S. equipment for its liquefied natural gas (LNG) projects, such as the embattled Arctic LNG 2. This project, majority-owned by Novatek, has struggled under Western sanctions that cut off access to essential ice-class ships and technology. Despite these hurdles, the Arctic LNG 2 plant resumed limited natural gas processing in April 2025, with five sanctioned cargoes loaded this year. Washington, for its part, appears eager to ensure Russia buys U.S. technology over Chinese alternatives, reflecting a broader strategy to drive a wedge between Beijing and Moscow. As one source told Reuters, “Washington is seeking to prompt Russia to buy U.S. technology rather than Chinese as part of a broader strategy to alienate China and weaken relations between Beijing and Moscow.”
The timing of these talks is no accident. Russia’s oil industry, despite weathering multiple rounds of U.S. and EU sanctions, faces mounting challenges. Ukrainian drone strikes have targeted refineries and pipelines, threatening the country’s fuel supplies and economic stability. According to The Wall Street Journal, Russia’s output is likely to decline without renewed foreign investment and technical expertise—something Exxon can provide.
For Exxon, the prospect of recouping some of its earlier losses is a powerful motivator. The company’s exit from Russia in 2022 remains a sore point, with billions written off and a legacy of frustration over what it described as expropriation. Since then, Exxon has maintained back-channel communications with Rosneft, hoping to salvage its stranded assets. The recent shift in U.S. political winds, with Trump’s administration showing more openness to business with Russia, has given Exxon new hope. “The requests so far have landed on sympathetic ears,” The Wall Street Journal reported, with one source describing the White House’s eagerness to announce a major investment deal after the Alaska summit. “This is how Trump feels like he’s achieved something,” the source added.
Yet the path ahead is anything but straightforward. Trump has threatened to impose even harsher sanctions on Russia unless peace talks make progress, and he has floated the idea of steep tariffs on India, a major buyer of Russian oil. These measures, if enacted, could further complicate Russia’s efforts to maintain its current level of oil exports. Meanwhile, the European Union has taken a hard line, pushing to phase out Russian gas imports entirely by 2027—a plan that has stalled any efforts to revive Russian gas flows to Europe. As a result, the latest discussions have shifted toward bilateral deals between the U.S. and Russia, with less emphasis on the EU’s collective stance.
Inside Russia, the stakes are high. Putin’s decree, signed on the same day as the Alaska summit, marks a significant policy reversal. It potentially opens the door for foreign investors, including Exxon, to regain their stakes in Sakhalin-1, but only if they actively support the lifting of Western sanctions. The move is widely seen as a pragmatic attempt to stabilize Russia’s economy and attract much-needed Western capital and technology. For Putin, the return of Exxon could help offset the impact of sanctions and ongoing military conflict, while sending a signal to other potential investors that Russia is open for business—albeit on its own terms.
The negotiations have also drawn in other players. U.S. envoy Steve Witkoff’s trip to Moscow earlier this month included meetings with Putin and Russian investment envoy Kirill Dmitriev, according to sources cited by Reuters. Discussions reportedly touched on a range of possible deals, including the purchase of U.S. nuclear-powered icebreaker vessels by Russia. These talks were also discussed within the White House, with Trump and his national security team continuing to engage with Russian and Ukrainian officials in pursuit of a bilateral agreement to end the war. A White House official, responding to questions about the deals, said, “It is not in the national interest to further negotiate these issues publicly.”
Despite the flurry of activity, both Exxon Mobil and Rosneft have declined to comment publicly on the negotiations, while Novatek and Dmitriev’s office have remained similarly tight-lipped. The lack of official statements reflects the highly sensitive nature of the talks and the uncertain political environment surrounding any potential deal.
As the world watches, the fate of Exxon’s Russian ambitions hangs in the balance. The stakes are enormous, not just for the company and its shareholders, but for global energy markets, U.S.-Russia relations, and the broader geopolitical chessboard. Whether Exxon ultimately returns to Sakhalin-1—or whether the deal collapses under the weight of political and economic pressures—remains to be seen. For now, one thing is clear: the intersection of business, diplomacy, and geopolitics has rarely been more fraught, or more consequential.
