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CNNMoney.com: ExxonMobil CEO: Russia Continues To Honor Sakhalin-1 Terms

June 21, 2007: 03:37 PM EST

LONDON -(Dow Jones)- Exxon Mobil Corp. (XOM) said Thursday it expects the Russian government to continue to honor a contract on the development of hydrocarbons reserves off Russia’s Pacific coast.

Rival Royal Dutch Shell PLC (RDSB.LN) earlier this year ceded a stake in a similar project off Sakhalin Island to a Russian state-controlled gas monopoly. Also, Shell reportedly agreed to ramp up its compensation to the Russian government in a bid to salvage the multibillion-dollar venture.

“The Russian government continues to honor the contract and we are meeting the obligations,” ExxonMobil CEO Rex Tillerson said following a speech. “The expectation is that they will continue to honor the contract.”

Earlier, Sergei Stephashin, chairman of Russia’s Audit Chamber, said Russia won’t try to change the terms of the ExxonMobil-operated Sakhalin-1 project.

ExxonMobil plans to ship natural gas from Sakhalin-1 to Asia, but Russian media have reported that the gas monopoly, OAO Gazprom (GSPBEX.RS), wants the gas to satisfy demand in the domestic market in Russia’s Far East.

Russia restricts the export of its gas; ExxonMobil maintains that its Sakhalin-1 agreement, ratified by Russia’s parliament, gives it freedom over exports.

-By Devon Maylie, Dow Jones Newswires; +44 (0)20 7842 9483; [email protected] dowjones.com

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