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Shell out of Russia after the invasion of Ukraine, joining BP

Shell out of Russia after the invasion of Ukraine, joining BP
  • Shell graduated from giant Sakhalin 2 LNG project
  • The move causes $3 billion in disability
  • “We are shocked by the loss of life in Ukraine,” says the CEO.

LONDON, Feb 28 (Reuters) – Shell Corporation (sigh) On Monday, it said it would phase out all of its Russian operations, including a major liquefied natural gas plant, becoming the latest major Western energy company to leave the oil-rich country after Moscow’s invasion of Ukraine.

The decision comes a day after rival BP gave up its stake in Russian oil giant Rosneft (ROSN.MM) In a move that could cost the British company more than $25 billion. Equinor Norway (EQNR.OL) It also plans to get out of Russia. Read more

Shell said in a statement that it would abandon its main Sakhalin 2 LNG plant, in which it has a 27.5 percent stake, and which is 50 percent owned and operated by Russian gas giant Gazprom.

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Shell said the decision to exit Russian joint ventures would lead to damage. She added that Shell had about $3 billion in non-current assets in these projects in Russia by the end of 2021.

“We are shocked by the loss of life in Ukraine, which we regret as a result of an unreasonable act of military aggression that threatens European security,” Shell CEO Ben van Beurden said in a statement.

Two BP sources told Reuters that BP Chief Executive Bernard Looney.

The sources said that during the previously unreported meeting, Looney made it clear that the company’s investment in Rosneft had become unacceptable.

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“There was only one decision we could make,” said one BP insider. “Exit was the only viable path.”

Sources said Looney held two more board meetings at the weekend, after which board members voted to immediately exit Rosneft’s stake.

Looney also spoke to British Business Secretary Kwasi Kwarteng on Friday, when Kwarteng expressed concern about BP’s interests in Russia. Kwarteng welcomed BP’s decision to exit on Twitter on Sunday.

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Kwarteng had a similar message to Shell on Monday.

“Shell made the right call to divest from Russia,” he said on Twitter, adding that he had spoken to Van Beurden earlier on Monday.

The Sakhalin 2 project, located off the northeastern coast of Russia, is huge, producing about 11.5 million tons of LNG annually, which is exported to key markets including China and Japan.

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

Shell said Russia’s exit would not affect its plans to switch to low-carbon and renewable energy.

The company also plans to end its participation in the Nord Stream 2 Baltic gas pipeline connecting Russia with Germany, which it helped fund as part of a consortium of companies. Germany suspended the project last week. Read more

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

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

“The right decision by Shell’s board of directors is to exit its Russian projects,” Adam Matthews, chief investment officer at the Church of England Pensions Board, which invests in Shell, said in a LinkedIn post.

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“Following BP’s decision, the focus is on those who have not yet taken such a step,” Matthews said.

Norway’s Equinor, which is majority-owned by the Norwegian state, said earlier on Monday that it would begin to divest from its joint ventures in Russia. It came after the country’s sovereign wealth fund, the world’s largest, said on Sunday it would cash out its assets in Russia.

Other Western companies, including global bank HSBC and the world’s largest aircraft leasing company AerCap, have said they plan to exit Russia as Western governments tighten economic sanctions on Moscow. Read more

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Additional reporting by Ron Busu and Shanima A in Bengaluru; Editing by Jonathan Otis, Simon Webb and Richard Boleyn

Our criteria: Thomson Reuters Trust Principles.