Feb 28, 2022 - Energy & Environment

Shell ends partnerships with Russia’s Gazprom after Ukraine invasion

Russian President Vladimir Putin during the meeting with Shell CEO Ben van Beurden in Saint Petersburg, Russia, in 2016.

Russian President Vladimir Putin during the meeting with Shell CEO Ben van Beurden in St. Petersburg, Russia, in 2016. Photo: Mikhail Svetlov/Getty Images

Shell announced Monday it will end its partnerships with Russian energy company Gazprom following Moscow's invasion of Ukraine.

Why it matters: Two major oil companies have now divested from Russian energy companies following the unprovoked attack on Ukraine, further signaling that it could reshape the West’s energy relationship with Russia.

  • Shell divestments 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.
  • It said it also intends to end its involvement in the Nord Stream 2 pipeline project, the certification process for which was frozen by German Chancellor Olaf Scholz last week.
  • Shell said it had around $3 billion in assets in Russian ventures at the end of 2021, and it warned that its decision to exit "will impact the book value of Shell’s Russia assets and lead to impairment."

What they're saying: “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 CEO Ben van Beurden said in a statement Monday.

  • “Our decision to exit is one we take with conviction. We cannot — and we will not — stand by," van Beurden said.
  • Kwasi Kwarteng, the United Kingdom's energy secretary, said in a tweet Monday that Shell made right call to divest from Russia: "There is now a strong moral imperative on British companies to isolate Russia. This invasion must be a strategic failure for Putin."
  • Shell moved its headquarters to London from The Netherlands in December.

The big picture: British oil company BP said Sunday it will exit from its 19.75% stake in Rosneft, the Russian oil giant with ties to the Kremlin.

  • That move came after the British government summoned BP CEO Bernard Looney to a meeting with Kwarteng.

What to watch: Whether more major oil and other commodity companies, , including U.S.-based Exxon, pull out of Russian ventures.

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