Escape won’t work
Russian President Vladimir Putin signed the decree on the implementation of special measures in the financial, fuel and energy sectors due to the actions of unfriendly countries. Document prohibits Until December 31, 2022, make a series of transactions on the participation of foreigners from hostile countries in Russian companies.
Restrictions apply to transactions with securities that make up the authorized capital of such organizations, as well as to rights and obligations, shares, agreements with which investment projects are implemented in Russia. The ban also includes transactions with shares of strategic companies and banks for Russia, as well as shares, rights and obligations in the Sakhalin-1 oil and gas project.
Alexander Frolov, deputy director of the National Energy Institute, said that foreign companies that previously planned to leave the Russian market and want to sell shares in joint projects in the country will no longer be able to do this until at least 2023. Gazeta.ru.
“Putin drew a line around the massive plans of foreign energy giants to exit the Russian market. This measure will help mitigate the history of negative investment, which will intensify as companies in the country continue to flee Russia. It will no longer be possible to escape until the end of December, ”Frolov concluded.
A number of large foreign energy companies engaged in investment activities in Russia. These include British BP and Shell, American Baker Hughes, Halliburton, Exxon Mobil, French Total, Norwegian Equinor and others.
BP
According to Frolov, BP will benefit more from Putin’s decree than others.
“BP owns 19.75% of Rosneft’s authorized capital. Despite all the cries about the desire to leave Russia, the British company has not yet sold valuable assets. Now it will be easier for BP to hide behind the decree, which, in fact, gave the company a solid explanation of why it should stay in Russia.
Frolov added that BP’s cautious stance on exiting the Russian market is explained by the company’s large presence in the country. The British holding has stakes in three projects: Taas-Yuryakh oil and gas production (20%), Yermak neftegaz (49%) and Kharampurneftegaz (49%).
Total
Despite the end of financing for the Arctic LNG-2 project, Total also maintains its presence in the Russian energy market. The French still hold shares in the projects of NOVATEK, Russia’s largest private producer of liquefied natural gas.
“Until the end of July, Total and Norwegian Equinor held substantial shares in the Kharyaginskoye field, 30% and 20% respectively. These assets must be transferred to Zarubezhneft.
However, Total still has a number of profitable investments. The French are shareholders in Yamal LNG (20%), Arctic LNG-2 (10%) and Terneftegaz (49%),” Frolov said.
At the end of July, the company recorded a net loss of USD 3.5 billion from the depreciation of its shares in joint projects with NOVATEK. Despite this, Total remains one of the largest minority shareholders in the Russian liquefied natural gas market.
crop
Norwegian Equinor has been operating on the Russian market for over 30 years. In addition to buying shares in the Kharyaginskoye field, the company participated in the creation of the Sevkomneftegaz joint venture to develop the Severo-Komsomolskoye field in Yamal. After losing 20% on the project, the Norwegians still have a large number of large presences in Russia.
Since the end of 2020, Equinor has been a partner of Angaraneft, which holds the license of the Severo-Danilovskoye field in the Irkutsk region. The company also owns 49% of Krasgeonats (later renamed AngaraOil), which has licenses to explore and produce oil at fields in Eastern Siberia.
“Equinor has transferred its stake in four joint projects to Rosneft. The Norwegians, unlike the same Total and BP, were honest – they announced their withdrawal from the market and left. The French, for example, have made it clear that they will not completely give up their presence in Russia, for fear that they will otherwise be captured by Putin. But the Norwegian giant is unlikely to be affected by the presidential decree,” says Frolov.
ExxonMobil and Shell
In early March, the American leadership of Exxon Mobil announced its intention to withdraw from the Sakhalin-1 project, one of the largest in terms of foreign direct investment. In addition to the Americans, the Japanese consortium Sodeco (30%) and the Indian state oil company ONGC Videsh Ltd actively invested in the project. Frolov emphasized that this project was emphasized in Putin’s decree.
“Last fall, the Exxon Neftegas Limited subsidiary announced its intention to invest $5 billion in Sakhalin-1 over five years. After the sanctions, the Americans stopped production on the project, Exxon tried every possible way, and a confusing situation has developed there recently. But after the decree, it will be extremely difficult for the Americans to leave the project before the end of the year,” Frolov explained.
The power engineer added that Shell was involved in the most intriguing case of all foreign energy giants regarding Putin’s decree.
“Shell has followed the most honest policy since the anti-Russian sanctions went into effect. They actively sold their assets in Russia, mainly the network of gas stations. The withdrawal from the Sakhalin-2 project in partnership with Gazprom stood apart. Due to the peculiarities of negotiations with the Chinese on the sale of almost 30% of the stake, there was talk of the risk of losing up to 5 billion dollars. Now, after Putin’s decree, Shell’s competitors will be able to successfully hide behind it. screen, while Shell has suffered huge losses since the end of February, they can only regret it, ”says Frolov.