The Government Approved the Rules for the Sale of Exxon’s Unclaimed Stake in Sakhalin-1
On September 28, the Government of the Russian Federation approved the rules for the assessment and sale of shares in the authorized capital of the limited liability company Sakhalin-1. The text of the relevant resolution is at the disposal of Interfax.
According to the document, the assessment of the share by order of the Ministry of Energy of the Russian Federation is carried out by B1-Consult LLC. Based on the results of the procedure, an independent appraiser prepares a report and receives a conclusion from a self-regulatory organization of appraisers confirming the assessment results. Payment for the services of the appraiser will be borne by the buyer of the share of Sakhalin-1 LLC.
The Ministry of Energy is obliged to send the report and conclusion to the Federal Agency for State Property Management within five days from the date of receipt. The Federal Property Management Agency, in turn, has 20 days to check the received documents for compliance with assessment standards and must send the corresponding conclusion to the Ministry of Energy. After this, the ministry has three days to prepare and send to the government of the Russian Federation a draft decision on approving the assessment of the share in the authorized capital of the company.
After the decision of the Russian government to approve the valuation of the share in the authorized capital of the company comes into force, Rosimushchestvo ensures the sale of the share. For this purpose, a selection of Russian legal entities is carried out that meet the criteria approved by the Government of the Russian Federation.
The initial price of a share in the authorized capital of Sakhalin-1 LLC will be the amount given by the appraiser.
If on the day preceding the day of selection, only one application for participation is submitted (or admitted to trading), the selection is not carried out. The only participant is recognized as the winner based on the initial cost of the share in the management company. The Federal Property Management Agency is obliged, within three days from the day the winner is determined, to provide a draft act of the Government of the Russian Federation on approval of the sale price of a share in the authorized capital of Sakhalin-1 LLC, on the determination of the person to whom this share will be sold, and on the conclusion of a purchase and sale agreement.
After this government act comes into force and the winner pays for the services of an independent appraiser, a purchase and sale agreement is concluded.
As reported, in October 2022, Russian President Vladimir Putin signed decree No. 723 “On the application of additional special economic measures in the fuel and energy sector…”, suggesting the replacement of the project operator with Exxon Neftegas Ltd. to the Russian LLC Sakhalin-1, as well as the transfer to the Russian legal entity of all the rights and obligations of the investor consortium provided for by the PSA.
Sakhalinmorneftegaz-Shelf is entitled to 11.5% in the new LLC (proportional to the share in the PSA). Another 8.5% is managed by JSC RN-Astra. Foreign participants in the PSA had to confirm their consent to receive a proportional share in the new operator within a month. This was done by the Japanese SODECO (30%) and the Indian ONGC (20%). In turn, Exxon Mobil (SPB: XOM) (30%) announced the termination of participation in the PSA project and its complete withdrawal from Russia; its unclaimed share is subject to assessment and subsequent sale to a Russian legal entity.
