Shell becomes the latest company to withdraw all of its joint ventures with Russian state-backed Gazprom, just a day after rival BP announced it would drop the 19.75% stake following the invasion of Russia. ‘Ukraine.
The oil titan has announced that it will end its joint ventures with Gazprom and related entities, and exit the Sakhalin 2 liquefied natural gas (LNG) plant by selling its 27.5% stake.
Shell also announced that it would give up its 50% stake in Salym Petroleum Development and energy company Gydan, owned and operated by Russian gas giant Gazprom.
Sakhalin 2, located off the northeast coast of Russia, is one of the largest integrated, export-oriented oil and gas projects, as well as Russia’s first offshore gas project – producing around 11.5 million tonnes of LNG per year.
Shell, whose Russian assets were reportedly valued at $3 billion at the end of last year, also said it would stop work on the controversial Nord Stream 2 pipeline project, which was completed last September. .
The oil giant is said to have invested around £750million in the 750-mile pipeline – designed to double the amount of natural gas flowing through the Baltic Sea pipe from Russia to Germany.
However, following Russia’s invasion of Ukraine, Germany said it was suspending final certification of the pipeline by regulators as part of additional sanctions against the country.
The announcement was made today following crucial talks between Shell Chief Executive Ben van Beurden and Business Secretary Kwasi Kwarteng.
Shell becomes the latest company to withdraw all of its joint ventures with Russian state-backed Gazprom, just a day after rival BP announced it would drop the 19.75% stake following the invasion of Russia. Ukraine (archive image)
The move comes just a day after rival oil giant BP dumped a stake in Russian energy giant Rosneft following the dispute sparked by President Vladimir Putin’s assault on Ukraine.
It was reported that following the move, BP shares fell more than 4% today as they face a $25 billion hit.
The oil company saw a huge chunk of its value wiped out after it announced it was giving up the 19.75% stake following the invasion of Ukraine.
The punishment came as the FTSE 100 index fell 1% in early trading as markets digested the huge sanctions package imposed by the West.
However, the declines seemed relatively muted compared to the chaos in Russia as the ruble plunged to record lows and the central bank was forced to raise interest rates to 20%.
Shell CEO 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.”
He added: “Our decision to come out is one we make with conviction. 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.”
The oil titan has announced that it will end its joint ventures with Gazprom and related entities, and exit the Sakhalin 2 liquefied natural gas (LNG) plant by selling its 27.5% stake. Pictured: Vladimir Putin
Shell said in a statement: “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 Russian assets and result in impairments.”
UK Business Secretary Kwasi Kwarteng also took to Twitter to congratulate Shell on its decision to withdraw its businesses.
He wrote: “Earlier today I spoke to Shell’s Managing Director, Ben van Beurden. Shell has made the right decision to divest from Russia, including Sakhalin II. There is now a strong moral imperative for British companies to isolate Russia.
Meanwhile, BP shares fell 7% early in trading before recovering some ground.
BP saw a huge chunk of its value wiped out after it was announced it would drop the 19.75% stake following the invasion of Ukraine
Shares of BP fell more than 4% in early trading today as it faces a $25 billion hit following the exit from a stake in Russian energy giant Rosneft
The FTSE 100 index fell 1% in early trading as markets digested the huge sanctions package imposed by the West
The fall will affect millions as pension funds often invest in the business – although she said dividends would not be immediately hit.
The stake in the Russian state oil producer was nominally worth $14 billion, but it’s unclear if the company will be able to sell – with speculation the stake could be seized by the Kremlin.
Further investments in the deal could bring the total loss to around $25 billion.
BP chief executive Bernard Looney is also resigning from Rosneft’s board with “immediate effect”, after ministers warned the tie-up could not continue.
The move came after Russian President Vladimir Putin attacked Ukraine last week in what the BP chairman called an “act of aggression” with “tragic consequences”.