Exxon winds down drilling as U.S. sanctions hit Russia

(Reuters) - Exxon Mobil said on Friday it will wind down drilling in Russia's Arctic in the face of U.S. sanctions targeting Western cooperation with Moscow's oil sector, after the Obama administration granted a brief extension to safely mothball its operations.

Washington extended sanctions on Russia last week over its aggression in Ukraine. The new measures 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. Companies have until Sept. 26 to stop the work.

The U.S. Treasury Department gave Exxon a short extension to wind down a rig, beyond the 14 days outlined in the sanctions, the Texas-based oil major said on Friday without elaborating.

"Following the short time extension, the license is non-renewable and no further work is permitted," Exxon spokesman Richard Keil told Reuters.

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

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