Shell to exit Russia after Ukraine invasion, becoming a member of BP

LONDON, Feb 28 (Reuters) – Shell (SHEL.L) will exit all its Russian operations, together with a serious liquefied pure gasoline plant, it mentioned on Monday, changing into the newest main Western power 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 big Rosneft (ROSN.MM) in a transfer that might value the British firm over $ 25 billion. Norway’s Equinor (EQNR.OL) additionally plans to exit Russia. learn extra

Shell mentioned in an announcement it should stop the flagship Sakhalin 2 LNG plant through which it holds a 27.5% stake, and which is 50% owned and operated by Russian gasoline big Gazprom.

Shell mentioned the choice to exit Russian joint ventures will result in impairments. Shell had round $ 3 billion in non-current property 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 Government Ben van Beurden mentioned in an announcement.

Rival BP’s Chief Government Bernard Looney referred to as an pressing assembly along with his management group on Thursday, simply hours after the primary Russian bombs fell on Ukrainian capital Kyiv final week, two BP sources instructed Reuters.

Throughout that beforehand unreported assembly, Looney made it clear the corporate’s funding in Rosneft had turn out to be untenable, the sources mentioned.

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

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 choice to exit on Twitter on Sunday.

SHELL

Kwarteng had the same message for Shell on Monday.

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

The Sakhalin 2 challenge, situated off Russia’s northeastern coast is big, producing round 11.5 million tonnes of LNG per yr, which is exported to main markets together with China and Japan.

For Shell, the world’s largest LNG dealer, leaving the challenge offers a blow to its plans to provide 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 modify to low-carbon and renewable power.

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 firms. Germany final week halted the challenge. learn extra

Shell can 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 choice 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 choice the main target is on people who have but to take such a step,” Matthews mentioned.

Norway’s Equinor, majority owned by the Norwegian state, mentioned earlier on Monday that it could 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 could divest its Russian property.

Different Western firms together with world 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 and Shanima A in Bengaluru; Modifying by Jonathan Oatis, Simon Webb and Richard Pullin

Our Requirements: The Thomson Reuters Belief Ideas.