Shell has joined bp and Equinor in saying its exit from its Russia joint ventures, with extra corporations anticipated to observe swimsuit following Russia’s invasion of Ukraine
Shell introduced its intention to exit its joint ventures with Gazprom and associated entities, together with its 27.5% stake within the Sakhalin-II liquefied pure fuel facility, its 50% stake within the Salym Petroleum Growth and the Gydan power enterprise.
Shell additionally intends to finish its involvement within the Nord Stream 2 pipeline undertaking connecting Russia with Germany. Germany final week mentioned it was stopping certification of the pipeline indefinitely, whereas the USA has positioned sanctions on the Gazprom subsidiary constructing it, Nord Stream 2 AG
On the finish of 2021, Shell had round US$3bn in non-current property in these ventures in Russia. The corporate expects that the choice to begin the method of exiting joint ventures with Gazprom and associated entities will influence the guide worth of its Russia property and result in impairments.
This follows bp’s announcement on 27 February that it’s going to exit its 19.75% shareholding in Rosneft, which it has held since 2013. Moreover, bp chief govt officer Bernard Looney is resigning from the board of Rosneft with instant impact, together with former bp group chief govt Bob Dudley.
The resignations would require bp to alter its accounting therapy of its Rosneft shareholding and, consequently, it expects to report a fabric non-cash cost with its first quarter 2022 outcomes.
bp, which has operated in Russia for greater than 30 years, will take a big monetary hit, paying a US$11bn cost when it writes off international trade losses which have gathered over the previous few years and one other cost referring to the worth of its stake.
bp chair Helge Lund mentioned, “This army motion … has led the bp board to conclude that our involvement with Rosneft, a state-owned enterprise, merely can not proceed. We are able to now not help bp representatives holding a job on the Rosneft board. The Rosneft holding is now not aligned with bp’s enterprise and technique and it’s now the board’s resolution to exit bp’s shareholding in Rosneft. The bp board believes these choices are in the most effective long-term pursuits of all our shareholders.’
The actions of bp and Shell had been welcomed by the UK authorities.
Norway’s Equinor has additionally introduced that it’s going to cease new investments into Russia, and begin the method of exiting its Russian joint ventures, concerning its place as “untenable”.
Equinor has been in Russia for over 30 years and entered a cooperation settlement with Rosneft in 2012. On the finish of 2021 Equinor had US$1.2bn in non-current property in Russia. The corporate expects that the choice to begin the method of exiting joint ventures in Russia will influence the guide worth of its Russian property and result in impairments.
France’s TotalEnergies, which has a signficicant Russia involvement and owns a 19.4% stake in Novatek, Russia’s largest producer of LNG, has stopped in need of divesting its Russian property, however has mentioned that it’s going to not be offering capital for brand new tasks in Russia.