Shell will disassociate its joint ventures with Russian state energy company Gazprom, a day after BP announced it would sell its 20% stake in Kremlin-owned oil company Rosneft as British companies distance themselves from Vladimir Putin.
The oil company said it will " exit its joint ventures with Gazprom and related entities," which are worth about $3 billion.
The announced sales include its 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture.
Shell will also end its participation in the Nord Stream 2 pipeline project, in which it holds a $1 billion 10% stake. Germany, which was supposed to double its imports of Russian gas through the pipeline, has recently halted the project in light of Russia's invasion of Ukraine.
"We are saddened by the loss of life in Ukraine, which we regret, stemming from a senseless act of military aggression that threatens European security," Shell chief executive Ben van Beurden said.
The company said that its staff group in Ukraine and other countries has been working together to manage the company's response to the crisis at the local level. It will also cooperate with aid partners and humanitarian agencies to help in the relief effort.
"Our decision to abandon is a firm one," Van Beurden said. Shell will still have a network of service stations in the country.
Business Secretary Kwasi Kwarteng, who spoke earlier with the Shell chief on Monday, said the company had made the "right decision."
"There is now a strong moral imperative on British businesses to isolate Russia. This invasion must be a strategic failure for Putin."
Asked whether the Government had put pressure on Shell and BP to leave Russia, a Whitehall source said that ministers had been pushing for a free door, with the companies keen to disassociate themselves from Putin's Kremlin.
"We cannot - and will not - sit on our hands," Van Beurden said. "Our immediate focus is on the security of our people in Ukraine and on 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 about $3 billion in non-current assets in its Russian ventures.
"We expect that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell's assets in Russia and lead to impairments," the company said.
This may indicate that the cost of exiting its Russian joint venture will exceed $3 billion, given the costs Shell may incur to physically withdraw from the vast and technically challenging Sakhalin-2 project, which requires highly specialized personnel and equipment.
Source: The Guardian