Oil giant Shell is cutting ties with Russia over its invasion of Ukraine, just one day after BP announced it would do the same.
Shell said it will exit its joint ventures with the Russian firm Gazprom, including its 27.5% stake in Sakhalin-II, a liquid natural gas plant, and its 50% stake in the company Salym Petroleum. It will also end its involvement in the Nord Stream 2 gas pipeline. The ventures represent about $3 billion in assets for Shell.
“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 CEO Ben van Beurden. “Our decision to exit is one we take with conviction.”
Shell’s move heightens pressure on other major energy companies, including Total and Exxon, to pull business from Russia as well.
Shell’s exit follows similar move by BP
Shell competitor BP announced yesterday it would exit its 19.75% stake in Russia’s state owned oil company Rosneft, which could result in losses as high as $25 billion for the UK oil major.
BP had been involved in Russia for three decades, and was the biggest foreign investor in the country. Just a few weeks ago BP CEO Bernard Looney defended the energy company’s connections with Russia even as troops were amassing on the Ukrainian border, arguing the firm could “avoid the politics.”
But Moscow’s invasion of Ukraine was evidently a bridge too far for the UK government, which in recent days put pressure on BP to pull out of Russia.
Will Total and Exxon pull out of Russia too?
BP and Shell’s decision to exit Russia places heightened scrutiny on other major Western oil companies with a presence in Russia, including Total and Exxon Mobil.
US firm Exxon has been working in Russia for over 25 years, and currently has more than 1,000 employees based there. It has a 30% stake in a natural gas project located in Russia’s Sakhalin Island, as well as a 7.5% interest in the Caspian Pipeline Consortium, which exports oil from Kazakhstan through Russia. The French company Total Energies gets about 5% of its total cash flow from operations in Russia, with a 19.4% stake in the Russian gas producer Novatek and an interest in the Yamal LNG, one of the biggest liquefied natural gas projects in the world.
In a statement provided to Quartz, Total condemned Russia’s military aggression in Ukraine and said it would no longer provide capital for new projects in the country. Exxon didn’t immediately respond to a request for comment. The next challenge for energy companies that do pledge to pull out will be finding buyers, as strict economic sanctions will make Russian investments riskier than usual.