Energy company Shell to exit all Russia operations

The move comes a day after rival BP abandoned its stake in Russian oil giant Rosneft

Shell said the decision to quit the joint ventures in Russia would lead to impairments. Reuters
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Shell will exit all its Russian operations, including a major liquefied natural gas plant, it said on Monday, becoming the latest major western energy company to quit the oil-rich country in response to Moscow’s invasion of Ukraine.

On Sunday, rival BP abandoned its stake in Russian oil giant Rosneft in a move that could cost more than $25 billion.

Shell will quit the flagship Sakhalin-2 LNG plant, in which it holds a 27.5 per cent stake, and which is 50 per cent owned and operated by Russian energy company Gazprom, it said.

Sakhalin 2, off Russia's northeastern coast, is huge, producing about 11.5 million tonnes of LNG per year, which is exported to major markets including China and Japan.

For Shell, the world's largest LNG trader, leaving the project deals a blow to its plans to supply gas to fast-growing markets in the coming decades.

Shell said the Russia exit will not affect its plans to switch to low-carbon and renewables energy.

The company said it also planned to end its involvement in the Nord Stream II gas pipeline from Russia to Germany, which it helped to finance as a one of a consortium of companies.

Shell said the decision to quit the joint ventures in Russia would lead to impairments. The company had about $3bn in non-current assets in these ventures in Russia at the end of 2021, it said.

“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,“ Shell chief executive Ben van Beurden said.

Shell will also exit the Salym Petroleum Development, another joint venture with Gazprom.

Together, Salym and Sakhalin 2 contributed $700 million to Shell's net earnings in 2021.

"Right decision by the Board of Shell to exit its Russian ventures," Adam Matthews, chief responsible investment officer for the Church of England Pensions Board, which invests in Shell, said in a LinkedIn post.

"Following BP's decision, the focus is on those that have yet to take such a step," Matthews said.

Other western companies, including global bank HSBC and the world's biggest aircraft leasing firm AerCap, said they plan to exit Russia as western governments ratchet up economic sanctions on Moscow.

Updated: March 01, 2022, 5:11 AM
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