Russian PM Orders Amicable Settlement With ExxonMobil in Dispute Over Sakhalin-1

Russian PM Orders Amicable Settlement With ExxonMobil in Dispute Over Sakhalin-1
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AFP 2017/ ERIC PIERMONTBusiness14:26 14.09.2017(updated 19:10 14.09.2017) Get short URL149941

Russia and US-based energy giant ExxonMobil have settled a dispute over taxes in a pre-trial order after the Russian president announced that the parties had reached an agreement.

MOSCOW (Sputnik) — The Russian government will enter into an amicable agreement with the ExxonMobil oil and gas corporation on a tax dispute over the Sakhalin-1 project, according to a Russian government order signed by Prime Minister Dmitry Medvedev.

“Agree with the proposal of the Russian Finance Ministry to conclude an amicable agreement within the framework of the legal proceedings on a lawsuit filed by Exxon Neftegaz Limited on the recovery of funds under the production sharing agreement for the Sakhalin-1 project submitted to the Arbitration Institute of the Stockholm Chamber of Commerce,” the order, posted on the government’s legal information portal, said.

The Russian Finance Ministry has commented on the agreement, saying that the sides have reached a “mutually beneficial compromise,”

The announcement comes a week after Russian President Vladimir Putin said that the Russian government had agreed with ExxonMobil to resolve issues concerning the Sakhalin-1 project.

ExxonMobil previously filed a lawsuit with Stockholm Arbitration against Russia on refunding part of its taxes with regard to the Sakhalin-1. The company tried to reduce the profit tax from 35% to 20% and to return the money which, in its opinion has overpaid for seven years. The amount of the claim was $637 million. The representative from the Russian Finance Ministry said in late April that ExxonMobil and Russia will try to resolve the tax dispute in a pre-trial order, while the proceedings in the Arbitration Court of Stockholm have been postponed for several months.

ExxonMobil is the operator of the Sakhalin-1 offshore project with Japanese Sodeco, Russia’s Rosneft and Indian ONGC being the other participants in the project.

Sakhalin-1 is a large-scale project, carried out under a production sharing agreement (PSA), signed in 1996. The production is being carried out on the northeastern shelf of Sakhalin Island.

Source.