Major oil companies pull out of once-promising Russia
Shell announced on Monday that it will cut ties with the Russian state-owned energy giant Gazprom. The move follows a similar decision from BP, which on Sunday said it will sell its shares in Russian-state firm Rosneft. The back-to-back announcements signal that even though Western countries have not sanctioned Russian energy companies, businesses no longer see operation in Russia as a safe investment.Gazprom's and Rosneft's London-listed stocks suffered major losses on Monday, losing 42% and 53%, respectively."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," Ben van Beurden, Shell's chief executive, said in a statement.The company will also end its investment in the Nord Stream 2 gas pipeline. Last week, Germany, which would receive Russian gas through the pipeline, announced it is suspending the planned operation. Shell will also sell its 27.5% stake in the Sakhalin-II liquefied natural gas facility and its 50% stakes in two Siberian oil ventures.The company said the projects were worth about $3 billion at the end of 2021, and it expects exiting Russia will lead to impairment charges."Our decision to exit is one we take with conviction," van Beurden said. "We cannot — and we will not — stand by."Competitor BP will sell its 19.75% stake in Rosneft, which it has held since 2013. Its Russian assets totaled about $14 billion last year."The decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of BP," said chief executive Bernard Looney. He and former BP executive Bob Dudley resigned their seats from Rosneft's board Sunday. The company said it could be charged as much as $25 billion for ending its Russian investments."Russia's attack on Ukraine is an act of aggression which is having tragic consequences across the region. BP has operated in Russia for over 30 years, working with brilliant Russian colleagues," chairman Helge Lund said in a statement. "However, this military action represents a fundamental change. It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue."The British government pressured both firms to cut ties with Russia. Shell recently relocated from the Netherlands to London."There is now a strong moral imperative on British companies to isolate Russia," tweeted Kwasi Kwarteng, Britain's business and energy secretary. He said he called van Beurden and supported Shell's decision.Western energy companies flocked to Russia after the fall of the Soviet Union. In 2020, it was the world's third-largest oil producer, behind the United States and Saudi Arabia. Its 10.5 million barrels per day accounts for 11% of the world's oil production.On Tuesday, TotalEnergies said it would "no longer provide capital for new projects in Russia," but it did not say it would halt current production.Two oil benchmarks, West Texas Intermediate and Brent crude, were trading right around $100 per barrel Tuesday. Unlike Russian financial institutions, neither Gazprom nor Rosneft has been sanctioned."We haven't ruled that out," White House press secretary Jen Psaki said Monday.Neither Rosneft nor Gazprom responded to requests for comment. Copyright 2022 NPR. To see more, visit https://www.npr.org.