Shell to exit Russia after Ukraine invasion, joining BP

LONDON, March 1 (Reuters) – Shell (SHEL.L) will exit all its Russian operations, together with a significant liquefied pure gasoline plant, it mentioned on Monday, turning into the newest main Western vitality firm to stop the oil-rich nation following Moscow’s invasion of Ukraine.

The choice comes a day after rival BP deserted its stake in Russian oil large Rosneft (ROSN.MM) in a transfer that would price the British firm over $25 billion. Norway’s Equinor (EQNR.OL) additionally plans to exit Russia. learn extra

Shell mentioned in a press release it’ll stop the flagship Sakhalin 2 LNG plant by which it holds a 27.5% stake, and which is 50% owned and operated by Russian gasoline large Gazprom .

Shell mentioned the choice to exit Russian joint ventures will result in impairments. Shell had round $3 billion in non-current belongings in these ventures in Russia on the finish of 2021, it mentioned.

“We’re shocked by the lack of life in Ukraine, which we deplore, ensuing from a mindless act of navy aggression which threatens European safety,” Shell Chief Govt Ben van Beurden mentioned in a press release.

Rival BP’s Chief Govt Bernard Looney referred to as an pressing assembly along with his management workforce on Thursday, simply hours after the primary Russian bombs fell on Ukrainian capital Kyiv final week, two BP sources advised Reuters. Russia calls its actions in Ukraine a “particular operation”.

Throughout that beforehand unreported assembly, Looney made it clear the corporate’s funding in Rosneft had develop into untenable, the sources mentioned.

“There was just one determination we might make,” one of many BP insiders mentioned. “The exit was the one viable means.”

Looney held two extra board conferences on the weekend, after which board members voted to right away exit the Rosneft stake, the sources mentioned.

Looney additionally spoke to British Enterprise Secretary Kwasi Kwarteng on Friday, when Kwarteng expressed his concern about BP’s pursuits in Russia. Kwarteng welcomed BP’s determination to exit on Twitter on Sunday.

SHELL

Kwarteng had an analogous message for Shell on Monday.

“Shell have made the fitting name to divest from Russia,” he mentioned on Twitter, including that he had spoken to van Beurden earlier on Monday.

The Sakhalin 2 mission, positioned off Russia’s northeastern coast is large, producing round 11.5 million tonnes of LNG per 12 months, which is exported to main markets together with China and Japan.

For Shell, the world’s largest LNG dealer, leaving the mission offers a blow to its plans to produce gasoline to fast-growing markets within the coming a long time.

Shell mentioned the Russia exit won’t have an effect on its plans to change to low-carbon and renewables vitality.

The corporate additionally plans to finish its involvement within the Nord Stream 2 Baltic gasoline pipeline linking Russia to Germany, which it helped finance as part of a consortium of corporations. Germany final week halted the mission. learn extra

Shell will even exit the Salym Petroleum Growth, one other three way partnership with Gazprom.

Collectively, Salym and Sakhalin 2 contributed $700 million to Shell’s internet earnings in 2021.

“Proper determination by the Board of Shell to exit its Russian ventures,” Adam Matthews, chief accountable funding officer for the Church of England Pensions Board, which invests in Shell, mentioned in a LinkedIn submit.

“Following BP’s determination the main focus is on people who have but to take such a step,” Matthews mentioned.

Japanese buying and selling homes Mitsui & Co (8031.T) and Mitsubishi Corp (8058.T), which personal stakes of 12.5% and 10% in Sakhalin 2 respectively, mentioned individually that they’re inspecting Shell’s announcement. They mentioned they’d take into account the state of affairs with the Japanese authorities and companions for the mission, with out giving any additional particulars.

Norway’s Equinor, majority owned by the Norwegian state, mentioned earlier on Monday that it will begin divesting from its joint ventures in Russia. That got here after the nation’s sovereign wealth fund, the world’s largest, mentioned on Sunday it will divest its Russian belongings.

Different Western corporations together with international financial institution HSBC and the world’s greatest plane leasing agency AerCap mentioned they plan to exit Russia as Western governments ratchet up financial sanctions on Moscow. learn extra

Reporting by Ron Bousso in London, Shanima A in Bengaluru and Yuka Obayashi in Tokyo; Modifying by Jonathan Oatis, Simon Webb, Richard Pullin and Kenneth Maxwell

Our Requirements: The Thomson Reuters Belief Rules.