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Highlights
- Western countries, including the UK, US and Russia, have imposed further economic and financial sanctions against Russian companies and businesses.
- Oil giant Shell Plc is the latest major energy company to exit its joint ventures with Russian state energy firm Gazprom.
- The decision came a day after BP Plc abandoned its around 20% stake of the Russian oil company Rosneft, which will cost it over US$25 billion.
Western countries, including the UK, US, and Russia, have imposed further economic and financial sanctions against Russian leaders, public institutions, and businesses after Russia invaded Ukraine. The sanctions aim to cripple the Russian economy, hit the financial resources required for the military assault.
© 2022 Kalkine Media®
Image description- Shell Plc is the latest major energy company to exit its joint ventures with Russian state energy firm Gazprom.
Oil giant Shell Plc (LON: SHEL) became the latest major Western energy company to exit its joint ventures with Russian state energy firm Gazprom, including a major liquefied natural gas plant, which will lead to impairment. The decision came a day after BP Plc (LON: BP) abandoned its around 20% stake in the Russian oil company Rosneft, which cost it over US$25 billion.
Shell Plc said it will abandon its 27.5% interest in the flagship Sakhalin-II LNG plant, which is 50% owned and operated by Gazprom, 10% interest worth US$1 billion in the Nord Stream 2 pipeline project linking Russia to Germany, and around 50% holding in the Gydan energy venture and the Salym Petroleum Development, which together contributed US$700 million to Shell’s net earnings in FY2021. By the end of year 2021, the oil giant declared that it has around US$3 billion non-current assets in these ventures located in Russia.
The exit of one of the largest oil and gas businesses in the world will deprive the Russian all-important energy industry of both foreign investment and valuable expertise.
The oil giant move will add pressure on other companies that are still operating in Russia to follow suit. Norway’s Equinor ASA has also said that it will abandon its Russia operations. Investors are keenly watching which company will be next to exit Russia.
On 1 March, FTSE 100-listed Shell Plc (LON: SHEL)’s market cap stood at £149,994.31 million. Since the start of 2022, it has provided its shareholders with a return of 19.84% as of 25 February 2022, while its one-year year stands at 35.29%. Shell plc’s shares were trading at GBX 1,944.00, down by 1.42%, at 10.00 AM (GMT) on 1 March 2022.
Also Read: Rio Tinto, BHP, Glencore: Aluminium stocks you may buy now
Let us look at some companies that still have operations in Russia.
TotalEnergies SE (LON: TTE)
TotalEnergies SE is a multinational integrated oil and gas company that has operations in Russia representing around 5% of its total cash flow. The company holds a fifth of gas producer Novatek, 10% interest in the future Arctic LNG 2 project and a large interest in Yamal LNG project. TotalEnergies SE’s market cap stands at £104,738.75 million, and its shares were trading at EUR 46.33 at 9.45 AM, on 1 March 2022.
© 2022 Kalkine Media®
Exxon Mobil Corp (LON:0R1M)
After rivel BP Plc and Shell Plc decided to exit from all their Russian operation, Exxon Mobile Corp hasn’t disclosed its intention for its 30% interest in the Sakhalin 1 project, which is a joint venture with Rosneft, as well as Indian and Japanese firms. The huge offshore crude project in the Russian Far East produces around 227,000 barrels a day. Exxon Mobil Corp’s shares were trading at US$78.40 at 9.45 AM, on 1 March 2022.
Also Read: Gazprom, Sberbank, Lukoil: Stocks impacted by Russia-Ukraine crisis
Rio Tinto Plc (LON: RIO)
Rio Tinto Plc is the world’s second-largest metals and mining company. Queensland Alumina Ltd which is 80% owned and operated by Rio Tinto Group has its 20% stakes with the Russian aluminum giant United Co. Rusal International PSJC. Rio Tinto Plc’s market cap stands at £72,284.55 million, and its shares were trading at 5,883.00, up by 1.59%, at 9.45 AM, on 1 March 2022.
Glencore Plc (LON: GLEN)
Industrial metals and mining company, Glencore Plc jointly owns Viterra agriculture unit with VTB Group, which is Russian state-owned bank. Further, it has 10% stake in En+ Group International PJSC, which is an aluminum and hydro power producer and controls United Co. Rusal International PJSC. Glencore also has 0.5% stake in Rosneft PJSC and a massive offtake deal with Rusal. Glencore Plc’s market cap stands at £58,303.32 million, and its shares were trading at GBX 442.80, up by 0.15%, at 9.45 AM, on 1 March 2022.
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