Majors start process of exiting Russian E&P

March 2, 2022
A number of international operating companies have announced plans to divest their interests in Russian oil and gas projects in response to Russia’s invasion of Ukraine.

Offshore staff

LONDON and PARIS – A number of international operating companies have announced plans to divest their interests in Russian oil and gas projects, in response to Russia’s invasion of Ukraine.

Shell has announced plans to exit its joint ventures with Gazprom and related entities, in response to events in Ukraine.

The assets include a 27.5% stake in the Sakhalin-II LNG complex on Sakhalin Island; and a 50% interest in the onshore Salym Petroleum Development and the Gydan energy venture, both in Siberia.

According to a report in Britain’s Daily Telegraph, Sakhalin 2 and Salym contributed $700 million to the company’s net earnings in 2021.

Sakhalin 2’s infrastructure includes three offshore platforms serving the Piltun-Astokhskoye and Lunskoye fields; 300 km (186 mi) of offshore pipelines and 1,600 km (994 mi) of onshore pipelines; and an oil export terminal.

In addition, Shell plans to withdraw from the 750-mi Nord Stream 2 gas pipeline project in the Baltic Sea, where its share of the investment is reportedly around $1 billion.“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,” said Shell’s CEO Ben van Beurden.

He added: “Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia. In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”

Earlier, bp said it would offload its 19.75% stake in Russian oil company Rosneft, and Equinor is also withdrawing from activities in Russia.

Today, TotalEnergies has also condemned Russia's “military aggression against Ukraine,” adding that it “supports the scope and strength of the sanctions put in place by Europe and will implement them regardless of the consequences (currently being assessed) on its activities in Russia.” Further, the company “will no longer provide capital for new projects in Russia.”

ExxonMobil announced that “in response to recent events, we are beginning the process to discontinue operations at the Sakhalin-1 project, and developing steps to exit the Sakhalin-1 venture.” The company also said that “given the current situation, ExxonMobil will not invest in new developments in Russia.”