Shell joins other oil majors in exit of Russian joint ventures

Must Read

OilNOW
OilNOW
OilNOW is an online-based Information and Resource Centre
- ADVERTISEMENT -

Shell International BV (Shell), one of the largest oil companies in the world, on Monday announced that it intends to join other oil majors in exiting equity partnerships held in Russia in response to the barbaric invasion of Ukraine.

Shell said it would be pulling out of joint ventures with Gazprom, Russia’s majority state-owned energy company which owns the world’s biggest gas transmission system capable of continuously conveying gas over long distances across Russia and abroad.

Shell said it will also give up its 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project where it is one of five energy companies which committed to provide financing and guarantees for up to 10% of the estimated €9.5 billion total cost of the project.

Shell’s Chief Executive Officer, Ben van Beurden in a statement said he is shocked by the loss of life in Ukraine which the company deplores as it resulted from a senseless act of military aggression which threatens European security.

“Our decision to exit is one we take with conviction,” said van Beurden.

He added, “We cannot – and we will not – stand by. Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia. In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”

At the end of 2021, Shell had around £$3 billion in non-current assets in its ventures in Russia. The CEO said he expects that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s Russia assets and lead to impairments.

Further to this, the CEO said Shell’s staff in Ukraine and other countries has been working together to manage the company’s response to the crisis locally while adding that it will also work with aid partners and humanitarian agencies to help in the relief effort.

The CEO noted that Shell’s Powering Progress strategy and financial framework remain unchanged.

He said in this regard, “We reiterate our progressive dividend policy and intent to distribute 20-30 percent of CFFO to shareholders in the form of dividends and share buybacks while targeting a strong balance sheet with long-term AA credit metrics. We stepped up our distributions by announcing an £$8.5 billion share buyback programme for the first half of 2022, and we expect to increase our dividend per share by 4 percent for the first quarter of 2022.”

After being in Russia for over 30 years, Norway’s Equinor also announced its decision to stop new investments in Russia and start exiting joint ventures.

Equinor’s statement followed BP’s said on February 27 that it would exit its near 20% stake in Russia’s largest crude producer, Rosneft, in response to Russia’s role in the Ukraine crisis. That same day, the Norwegian government announced its sovereign wealth fund will pull out of all investments in Russia.

- Advertisement -
spot_img

Latest News

Ali in fiery exchange with BBC journalist about Guyana’s oil

Guyana’s President, Dr. Mohamed Irfaan Ali, sat down for an interview with BBC journalist, Stephen Shakur, on the sidelines...

More Articles Like This