Shell follows BP out of Russia as oil companies abandon Putin

Shell is getting out of Russia and ditching its joint ventures with Gazprom, including its involvement with the moribund Nord Stream 2 natural gas pipeline.

The UK-based oil company said Monday it would dump its 27.5% stake in the Sakhalin-2 liquified natural gas facility, its 50% stake in a project to develop the Salym fields in western Siberia and its 50% interest in an exploration project in the Gydan peninsula in northwestern Siberia.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” Shell (RDSA) CEO Ben van Beurden said in a statement.

Shell’s move follows BP’s (BP) announcement Sunday that it was abandoning one of Russia’s biggest foreign investments by exiting its 19.75% stake in Rosneft and associated joint ventures. Analysts said Monday that BP could take a hit of more than $26 billion as it walks away from its business in the country.

Shell earned about $700 million in 2021 from the Sakhalin and Salym joint ventures. Its interests in Russia were valued at about $3 billion at the end of the year, and the company said abandoning the Gazprom projects would probably lead to impairment charges.

“Our decision to exit is one we take with conviction,” van Beurden said. “We cannot — and we will not — stand by.”

Russian President Vladimir Putin enters a hall before a meeting with members of the Security Council via a video link in Moscow, Russia February 25, 2022. Sputnik/Alexey Nikolsky/Kremlin via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY.

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The company was one of five that provided 50% of the financing and guarantees for the estimated €9.5 billion ($10.6 billion) cost of building Gazprom’s Nord Stream 2 pipeline under the Baltic Sea between Russia and Germany. The project was effectively killed off last week when German Chancellor Olaf Scholz said the country would halt certification of the pipeline.

Norwegian oil and gas company Equinor will also begin to exit its joint ventures in Russia, the company said in a statement Monday.

“We are all deeply troubled by the invasion of Ukraine, which represents a terrible setback for the world,” said Anders Opedal, president and CEO of Equinor.

The company said it had $1.2 billion in long-term investments in Russia at the end of 2021. It has operated in Russia for more than 30 years and has a cooperation agreement with Rosneft.

French oil giant TotalEnergies (TTFNF) on Tuesday condemned Russia’s actions and said it would no longer provide capital for new projects in the country. TotalEnergies (TTFNF) has done business in Russia for 25 years, and recently helped launch a major liquefied natural gas project on the Siberian coast.

Other European energy companies continue to have a presence in Russia, including the remaining Nord Stream 2 partners France’s Engie (ENGIY), Austria’s OMV (OMVJF), Germany’s Wintershall Dea and Uniper, as well as Italy’s ENI (E).

ExxonMobil (XOM), which has been active there for more than 25 years, has reduced its presence since Russia annexed Crime in 2014. But its subsidiary, Exxon Neftegas Limited, still has a 30% stake in Sakhalin-1 — a vast oil and natural gas project located off Sakhalin Island in the Russian Far East. It has operated the project since 1995 on behalf of a consortium that includes Japanese and Indian partners, as well as two affiliates of Rosneft.

— Chris Liakos and Pamela Boykoff contributed to this article.