Facing Sanctions, Exxon Winds Down Russian Arctic Drilling

Oil major Exxon Mobil said on Friday the U.S. Treasury Department had granted it a license to wind down operations on a drilling well in the Kara Sea in the Russian Arctic that has been targeted by U.S. sanctions.

Washington intensified sanctions on Russia last week over its intervention in Ukraine. The new sanctions seek to stop billions of dollars worth of cooperation between Western and Russian energy companies on oil drilling in Russia's Arctic, in Siberia and offshore.

Texas-based Exxon began moving a rig called West Alpha from Norway to the Russian Arctic in July. Exxon is hoping for a major oil discovery in the Kara Sea with Russian company Rosneft , with which it signed a $3.2 billion agreement in 2011 to develop the region.

Exxon said the Treasury Department granted a license to it and other U.S. contractors and individuals involved with the University-1 well "to enable the safe and responsible winding down of operations" related to the well.

The Treasury Department said it does not comment on license applications or requests.

The sanctions seek to slow Russia's future oil production by banning U.S. and European Union cooperation on all energy services and technology in Russia's unconventional oil fields.

Russia is one of the world's top crude producers and the biggest supplier to Europe, but its reservoirs are in decline and it must look to new sources to retain its positions.

Exxon shares were up about 0.8 percent in midday trading on the New York Stock Exchange.

By Timothy Gardner (C) Reuters 2014.