ExxonMobil said Friday it would "wind down" a drilling project in the Russian Arctic following US sanctions targeting Moscow over its support for Ukraine's separatist rebels.
Exxon said the US Treasury Department granted it extra time to safely conclude the University-1 well in the Kara Sea, seen as a critical step in the US oil giant's long-term goal to discover and produce major new oil fields in Russia.
"ExxonMobil is complying with all US sanctions," the company said.
Exxon's partner in the Kara venture is the state-controlled Russian giant Rosneft, which was targeted along with other Russian energy and banking companies in US sanctions announced September 12.
In that announcement, the Treasury Department gave US companies until September 26 to wind down exploration or production ventures with Rosneft and four other Russian energy companies on deepwater, Arctic offshore or shale projects.
The Treasury's extended deadline "recognizes the need to protect the safety of the individuals involved in these operations as well as the risk to the environment," Exxon said.
Exxon had originally planned to drill the University-1 well during the August-October period. Freezing conditions limit the drilling season to the summer months in the Kara region.
Besides the Kara venture, Exxon's operations in Russia include production from the Sakhalin-1 field that is unaffected by the US sanctions, an Exxon spokesman said.
Research firm Eurasia Group said Exxon will be the "hardest hit" by the sanctions on Russia because of the importance of the Rosneft exploration venture to its growth strategy.
"The latest sanctions could jeopardize both ExxonMobil and other foreign companies' relationships with Russia in the longer-term," Eurasia Group said.