Russia Monitor is a review of the most important events related to Russian internal and external security, as well as its foreign policies.
Date: 28 February 2022 Author: Grzegorz Kuczyński
Gazprom, Rosneft Lose Western Investors
Oil giants Shell and BP are quitting joint projects with the biggest Russian energy companies, marking the most significant move yet by a Western company in response to Moscow’s invasion of Ukraine. At the same time, Gazprom and Rosneft are losing billions after the prices of their shares collapsed and the Russian financial market plummeted amid Western sanctions.
Dutch-British energy company Shell announced on February 28 it will exit its joint ventures with Russian gas giant Gazprom. Shell will quit the Sakhalin 2 liquefied natural gas (LNG) plant in which it holds a 27.5 percent stake, and which is 50 percent owned and operated by Gazprom. The oil firm will also pull out of the Salym Petroleum Development in Siberia, another joint venture with the Russian gas giant. Shell also intends to end its involvement in the Nord Stream 2 pipeline project. The value of Shell’s joint ventures in the country is approximately $3 billion. It seems that the rapid retreat of BP will affect Moscow more than that of Shell. BP warned that it could take a writedown of as much as $25 billion as a result of quitting joint ventures with Russian businesses. BP, Russia’s biggest foreign investor, abruptly announced the move to quit Russian energy projects on February 27. “It has caused us to fundamentally rethink bp’s position with Rosneft,” the CEO of BP Bernard Looney said. The other BP-nominated director, Bob Dudley, BP’s former chief executive, will also step down from Rosneft’s board, whose member he was since 2013. BP has a 19.75 percent stake in Rosneft, a package reportedly worth some $14 billion in late 2021. State-controlled Gazprom and Rosneft have been run by two close associates of Vladimir Putin. Gazprom is headed by Aleksei Miller while Rosneft––by Igor Sechin. Both companies account for mass revenues to the federal budget. They are also a tool for Russian foreign policy, including Gazprom’s export policy in recent months or Sechin’s missions in allied countries––like Venezuela or Belarus.
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