Topline
Oil giant Shell on Monday announced it intends to exit joint ventures with Russian state-owned gas company Gazprom, becoming the latest firm to divest interests based out of Russia after the nation’s irrational invasion of Ukraine.
Key Facts
In a statement Monday, London-based Shell said it would exit a 27.5% stake in a liquefied natural gas facility based in Sakhalin Island, Russia; a 50% stake in the Salym Petroleum Development, a group of oilfields in West Siberia; and a 50% stake in an energy venture in the Gydan Peninsula.
The company said its assets in the ventures represented about $3 billion in value at the end of last year and noted that its decision to abandon them would lead to impairments, or accounting losses.
“Our decision to exit is one we take with conviction,” Shell CEO Ben van Beurden said in a Monday statement, adding that the company will “work through the detailed business implications” in compliance with a growing list of sanctions against Russia.
Shell, which did not immediately respond to Forbes’ request for comment, did not provide a time line for its divestiture or indicate how it would exit its stakes, but did say it would also end its involvement with the Nord Stream 2 pipeline, an $11 billion undersea project connecting Russia to Germany.
Crucial Quote
“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression that threatens European security,” Van Beurden said Monday.
Key Background
The economic fallout since Russian President Vladimir Putin ordered an invasion of Ukraine early Thursday has intensified amid a growing list of sanctions targeting the Russian government, businesses and oligarchs. Most recently, the Treasury announced its latest batch of sanctions Monday morning, blocking any American citizen from doing business with Russia’s central bank, finance ministry or National Wealth Fund, and freezing the assets of sanctioned entities in the U.S.
Tangent
BP and Shell aren’t alone in pulling away from Russian firms. Norway’s sovereign wealth fund said Sunday it will divest its Russian assets, worth about $2.8 billion, and British bank HSBC has reportedly told staffers it would stop working with several Russian banks. As Russian stocks and funds crashed Monday, experts warned growing international sanctions punishing Russia have made the nation “increasingly uninvestable for global investors,” largely because measures targeting the central bank’s reserve assets have helped push the ruble down to record lows. Meanwhile, a host of firms have taken other retaliatory measures, with Facebook’s parent Meta, for example, restricting access to Russian state media accounts in Ukraine and blocking Russian state media from running ads and earning money on the platform.
Further Reading
BP Drops Nearly 20% Stake In Russian-Owned Oil Firm After Invasion Of Ukraine (Forbes)
Airbnb, Etsy Join List Of Companies Supporting Ukraine Or Taking Action Against Russia (Forbes)
