Shell Oil and Gas is largely withdrawing from Russia due to the war in Ukraine. In doing so, Shell is following the example of Britain’s BP and Norway’s Equinor, which also announced that they are bidding farewell to cooperation with Russian state-owned companies. Only about 400 Shell gas stations in Russia have not been emptied by the company.
Shell said in a statement that it intends to terminate all its partnerships with the state gas company Gazprom. “We are shocked by the loss of life in Ukraine due to a senseless act of military aggression that threatens European security,” said Ben van Beurden. “Our decision to leave is one we make with conviction. We cannot – and will not – stand idly by.”
The value of all the joint venture shares amounted to about $3 billion at the end of last year. It turned out to be about 2.7 billion euros. The Oil and Gas Group believes that the sale will result in less than its book value and will therefore incur a loss.
Shell has more than 500 employees in Russia and is involved in many projects. For example, the group owns a 27.5 percent stake in a large liquefied natural gas (LNG) project in eastern Russia, called Sakhalin-2. This project is owned by Gazprom. Other shareholders are Japanese trading companies Mitsui and Mitsubishi. Last year, Shell earned $700 million, or roughly €625 million, from this project alone.
In addition, Shell is engaged in projects in West and Northwest Siberia, also through interests. Shell is also the lender to the controversial Nord Stream 2 gas pipeline, which runs from Russia to Germany via the Baltic Sea.
The group was already active in Russia before the Russian Revolution of 1917. During the communist regime, Shell’s assets were nationalized by the state. It was not until 1983 that the company returned, with an office to represent the interests of the company. In 1992, after the fall of the Soviet Union, Shell started the real physical business again by setting up its lubricant branch in the country.
British Economy Minister Kwasi Quarting said he welcomed Shell’s decision. “Shell made the right decision to sell its interests in Russia. There is now a strong moral obligation on British companies to isolate Russia,” Kwarteng said. This invasion must be a strategic failure for Putin.”
Read all about the Russian invasion at this file†
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