Shell announced it would exit all joint ventures with Russian gas giant Gazprom, including a joint venture in a major Sakhalin-II liquefied natural gas plant. The company said it also plans to end its involvement in the controversial Nord Stream 2 pipeline from Russia to Germany, in which it has a 10% stake worth around £746million. sterling.
Shell said it would “exit its joint ventures with Gazprom and related entities” which are worth around £2.2bn.
The oil giant is following rival BP which yesterday announced it would pull out of its plans with Russia, dealing a major blow to the oil-rich country.
BP on Sunday dumped its stake in Russian-controlled oil company Rosneft, which could cost Russia more than £18 billion.
Shell Chief Executive Ben van Beurden said in a statement: “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security.”
“Our decision to go out is one we make with conviction.”
He continued: “We cannot – and we will not – sit idly by. Our immediate objective is the security of our people in Ukraine and the support of our people in Russia.
“Discussing with governments around the world, we will also work on detailed trade implications, including the importance of a secure energy supply for Europe and other markets, in line with applicable sanctions.”
Shell said it was selling its 27.5% stake in Sakhalin-II in Russia as well as a 50% stake in Salym Petroleum Development NV, a joint venture with Gazprom being developed in Siberia.
The company also announced that it is ending its involvement in the Nord Stream 2 gas pipeline, recently shut down by Germany in response to Russia’s invasion of Ukraine.
The pipeline was expected to see gas imports to Germany from Russia double.
Shell said it would work with humanitarian partners and aid agencies to help support Ukraine.
The organization said it had around $3bn (£2.2bn) in “non-current assets” from its joint ventures with Gazprom at the end of 2021.
He said: “We expect the decision to initiate the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s assets in Russia and result in impairments.”
UK Business Secretary Kwasi Kwarteng praised Shell for its decision.
Mr Kwarteng tweeted: ‘Earlier today I spoke to Shell Chief Executive Ben van Beurden’,
“Shell made the right decision to divest from Russia – including Sakhalin II. There is now a strong moral imperative for British business to isolate Russia.”
“This invasion must be a strategic failure for Putin.”
Shell rival BP said on Sunday it would divest its 19.75% stake in Russian state-owned Rosneft “with immediate effect” following Russia’s attack on Ukraine.
The company’s chief executive, Bernard Looney, is also resigning from Rosneft’s board along with his other Rosneft director, Bob Dudley, BP said in a statement.
Pressure is now mounting on other oil companies to follow suit.
Many of the world’s largest oil companies, including TotalEnergies, ExxonMobil, Mitsui & Co. and Mitsubishi Corp, all have significant stakes in Russian energy projects.