Production at “Sakhalin-1” decreased 22 times

Oil production at russia’s “Sakhalin-1” project has plummeted due to Exxon Mobil’s refusal to accept local tanker insurance.

Western insurers stopped insuring tankers of Sovcomflot, the largest russian shipping group, against which sanctions were applied.

Oil production at the “Sakhalin-1” project has stopped due to the refusal of the American company Exxon Mobil to accept local insurance for tankers, Reuters reports.

“Exxon refused to accept Sovcomflot tankers,” one of the sources in the industry told the publication. Some cargo destined for Indian refineries was also affected because Exxon did not accept alternative coverage from russian insurers.

The European Union is to impose a ban on the insurance of russian oil tankers on December 5. So, the situation shows how much influence ship insurance and their reinsurance guarantees can have on oil operations.

Earlier, oil production at the Sakhalin-1 project fell from 220 to 10,000 barrels per day, after Exxon Mobil’s decision to withdraw from the project.

Reference: “Sakhalin-1” is an oil and gas project managed by the American ExxonMobil. Aimed at oil and gas development on the northeastern shelf of Sakhalin Island (russian federation). Among the participants of the project is the russian PJSC “Rosneft”.