The latest round of U.S. and EU economic sanctions against Russia, which target strategically important banking and energy companies, are aimed at choking off its access to Western debt and equity financing. They also impose restrictions on the sale or transfer of Western technologies and equipment to Kremlin-controlled energy companies like Rosneft.

What impact will these sanctions have on ExxonMobil, which is working closely with Rosneft to explore for oil and gas in various parts of Russia, and its future in the country?

Source: Wikimedia Commons.

Exxon's exposure to Russia
Though Exxon doesn't own an equity stake in Rosneft, unlike BP, which owns nearly 20% of Russia's largest oil company, it is working with Rosneft on a number of high-impact exploration projects. Back in 2011, it formed a joint venture with the Russian state-owned oil giant to explore for oil and gas in a number of promising shale formations in western Siberia and in Russia's Arctic seas.

Through its joint venture, it held 85,000 net acres in Sakhalin and 11.3 million net acres in the Kara and Black Seas at year-end 2013. This acreage contains a number of producing wells that contributed an estimated 6% of Exxon's total production last year. Luckily, however, the new sanctions likely won't impact the company's near-term oil and gas output in Russia.

Limited near-term impact
After all, they were specifically designed to cut off Rosneft and other Russian firms' access to Western capital, while "limiting any spillover effects on American companies." As such, sanctions will only have an impact on Rosneft's access to Western financing and will not prevent it from following through on joint venture projects that were contracted before the restrictions were announced. 

In fact, Exxon and Rosneft actually advanced exploration efforts in the Kara Sea earlier this month, when a drilling rig set sail to the area from Norway. The two companies will jointly operate the rig, called the West Alpha, and hope to make a huge discovery in the relatively uncharted sea, located between the northern coast of Russia and the Novaya Zemlya island chain.

Longer-term uncertainties loom
While Exxon hasn't been affected so far by the technology transfer restrictions, they could bite at some point down the line. According to a senior official from the Obama administration, the restrictions "will have a cumulative impact on development of future fields, particularly the exotic fields -- Arctic, deep sea, and shale," and the "impact of these restrictions will grow over time."

If sanctions are broadened in coming months, it could also potentially put at risk the capital Exxon has committed to Russia. As part of the joint venture deal inked in 2011, Exxon agreed to foot an exploration bill of roughly $3.2 billion. If additional sanctions prevent it from working with Rosneft, the company may not be able to recover the roughly $300 million it has already invested in shale pilot projects.

Investor takeaway
The latest round of U.S. and EU sanctions is unlikely to have a meaningful near-term impact on Exxon's relationship with Rosneft or its operations in Russia. However, additional sanctions could jeopardize the company's extensive investments in the country if it is unable to recoup the capital it has already sunk into exploration programs in western Siberia and the Kara Sea.