Corporate Strategy

Energy Firms Exit Russian Projects En Masse, Citing Ukraine Invasion (Updated 3/4/22)

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   |    Friday,March 04,2022

This week, several energy companies have announced that they will be abandoning projects tied with Russia in protest of the country's invasion of Ukraine.

Several other firms who have asset connections with Russia are reportedly mulling similar exits.

Russia is moving quickly to stifle this trend. On Tuesday, March 1, multiple reports have cited that Russia's Prime Minister Mikhail Mishustin said Moscow is looking to enact a presidential decree that would temporarily stop Western investors from selling Russian assets.

We will update this story as new information arises.

Companies Exiting Russian Interests

Companies that have announced such moves include:

Lukoil - Calls for "Immediate Cessation" of Ukraine Invasion, Requests "Diplomatic" Resolution

• On March 3, 2022, private Russian oil company Lukoil sent a letter to shareholders that called for "the immediate cessation" of the invasion of Ukraine, appealing to Russia to resolve the conflict through "diplomatic means."

• It is possible that Lukoil is concerned that countries will resort to sanctioning Russian oil. While sanctions on Russian oil have not yet been imposed, they will become increasingly likely if Russia continues to escalate its invasion.

• Lukoil is the second-largest oil company in Russia.

Eni - Will Sell Stake in Gazprom Co-owned Blue Stream Pipeline

• Italy's Eni is planning to sell off its stake in the Blue Stream pipeline, which it currently co-owns with Russia's Gazprom.

• The pipeline transports Russian gas to Turkey.

ExxonMobil - Exiting its Russian Sakhalin-1 Project, No Further Russian Investment

• After announcing plans to "scale back" operations at its Sakhalin Island region, its largest operation in Russia, Exxon has now announced it will close operations in the area. Exxon has a 30% stake in the Sakhalin 1 oil and gas project

• Additionally, Exxon stated it will not invest in any further projects in Russia.

Nord Stream 2 - Files for Bankruptcy Under Weight of Sanctions

• The Swiss-based owner of the Nord Stream 2 has filed for bankruptcy as a result of sanctions levied on Russia by several countries, according to a report by Reuters.

• Additionally, Nord Stream 2 has laid off all of its employees as of March 1, 2022.

BP plc - Citing Ukraine Invasion, BP to Dump 19.75% Stake in Rosneft, Exit Board

• The BP board has announced that BP will exit its shareholding in Rosneft. BP has held a 19.75% shareholding in Rosneft since 2013.

• Additionally, CEO Bernard Looney and the other Rosneft director nominated by BP, former BP group chief executive Bob Dudley, are resigning from the board of Rosneft with immediate effect.

• This could cost the company a loss of up to $25 billion.

Shell - Shell to Exit JV Projects with Gazprom, End Involvement in Nord Stream 2 Pipeline

Equinor - Equinor to Exit Russian JVs, Halt New Investments in Country

• The Norway-based firm has decided to stop new investments into Russia, and to start the process of exiting Equinor’s Russian Joint Ventures.

• At the end of 2021 Equinor had USD 1.2 billion in non-current assets in Russia.

TotalEnergies - TotalEnergies Will Make No New Investments in Russia

• The French corporation will not make any further capital investments in Russia, per a statement released on March 1, 2022.

• TotalEnergies did not mention plans for the cancellation or the sale of existing projects in the country.