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Friday, March 31, 2023

Shell Set to Sell Russian Investment, Amid Ukraine Invasion

Following the invasion of Ukraine, Shell is terminating its joint partnerships with the Russian energy firm Gazprom.

The deal will include a 27.5 percent share in a large liquefied natural gas project for the oil giant.

Ben van Beurden, Shell’s CEO, said the corporation is “shocked” by the loss of life in Ukraine.

It follows BP’s decision to sell its stake in Rosneft, the Russian state-owned oil company.

Shell will leave Gazprom’s flagship Sakhalin II complex, which is 50% owned and managed by the Russian company.

It will also sell a 50% share in two Siberian oilfield projects and discontinue its participation in the Nord Stream 2 gas pipeline from Russia to Germany, which it helped fund alongside a number of other corporations. German ministers have already placed the 1,200-kilometer pipeline beneath the Baltic Sea on hold.

Shell said in a statement on Monday that it expected the action, which will also apply to any “associated organizations” of Gazprom, to be worth around $3 billion (£2.2 billion).

Later this year, the accompanying charges will be recorded on the company’s financial sheet.

“We are confident in our choice to quit,” van Beurden said in a statement on Monday.

“We cannot – and will not – remain silent,” he continued, calling Russia’s activities “a stupid act of military aggression that jeopardizes European security.”

Shell’s action on social media received backing from Business Secretary Kwasi Kwarteng.

As part of new restrictions, Foreign Secretary Liz Truss designated Gazprom as one of the numerous Russian firms that will be unable to obtain any funds from UK financial institutions.

The European Union (EU), the United States, the United Kingdom (UK), and allies have decided to withdraw certain Russian banks from the Swift messaging system, which allows for seamless cross-border money transfers. The measure aims to cut Russia off from the global banking system and “damage their capacity to operate abroad.”

The assets of major Russian banks have been frozen, and they have been barred from the UK financial system. This prevents them from using the pound sterling to make payments in the UK.

Several nations have also placed sanctions on select people, including Russian President Vladimir Putin, Foreign Minister Sergei Lavrov, and a number of Russian oligarchs.

Shell’s move follows BP’s announcement that it will sell its interest in Rosneft, the Russian state-owned oil company, which it has held since 2013.

Bernard Looney, the company’s CEO, also said that he will retire from Rosneft’s board of directors with “immediate effect,” after serving on it since 2000, alongside chairman Igor Sechin, a personal friend of Russian President Vladimir Putin.

It’s too early to determine how or to whom BP’s share in Rosneft will be sold, according to the company.

When it writes down foreign exchange losses that have built over the previous several years, the company will incur a $11 billion penalty, as well as another charge related to the value of its share.

Equinor, a Norwegian oil and gas company, also announced its pullout from Russia on Monday, saying it will begin the process of selling its Russian joint ventures.

It claimed that its stance was “untenable” due to the continuous confrontation.

Canada’s Prime Minister, Justin Trudeau, has also declared that Russia’s crude oil imports will be prohibited.

Cedric Blackwater
Cedric Blackwater
Cedric is a journalist with over a decade of experience reporting on local US news, and touching on many global topics. He is currently the lead writer for Bulletin News.

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