Pressure is mounting on more British businesses to sever ties with Russia after the oil giant Shell becomes latest company to leave country, abandoning gas projects with country’s state energy firm Gazprom,
Shell said on Monday it would exit its 27.5% stake in the Sakhalin-2 liquefied natural gas facility, its 50% stake in Salim Petroleum Development and the Gydan energy venture.
A day earlier, BP announced plans Unload your 19.75% investment in state oil giant Rosneft After international outcry.
Shell has been one of the most important partners of the Russian oil industry, thanks to a “global cooperation” agreement with Gazprom, through which Shell offered expertise and equipment for offshore fossil fuel exploration. Gazprom also had a 10% stake in the planned Nord Stream 2 pipeline worth $1bn, which was due to double the flow of Russian gas into Germany until Berlin halted it earlier this month. He will also drop out of that project.
“Our decision to exit is one we take with conviction,” said Shell chief executive Ben van Burden. “We can’t – and we won’t – stand.”
Shell said its Russian projects are worth about $3 billion, while bp said it would recoup $25bn on its decision to sell its Rosneft stake.
“We are shocked by the loss of life” UkraineWhich we condemn, as a result of a senseless act of military aggression that threatens European security,” Van Burden said.
After decades of consolidation, which saw dozens of Russian firms listed on the London Stock Exchange and City firms spending billions of pounds on Russian stocks, British companies are scrambling to break away from their Moscow counterparts.
countries around the world are Offering Unprecedented Packages of sanctions against Russia that have so far affected the country’s central bank, airlines, energy firms and major commercial lenders including VTB and Bank Rossiya.
BP and Shell’s costly decisions to leave the country in which they farm and plow billions of pounds reflected an unprecedented severance of economic ties – one that would have huge implications for the global energy industry. Similarly, businesses ranging from city banks and law firms to consumer goods giants have to make troubling decisions.
A banking executive told the Guardian he had been working for more than a week to ensure sanctions measures, including blocking some Russian banks from accessing the SWIFT payment system, were being implemented. He said the city expected “infiltration” on Ukrainian territory. “No one expected a full-blown invasion.”
That means firms across the city are having to review millions of customer transactions, investment and fundraising deals. Includes dedicated sanctions teams on lenders Goldman Sachs Worked overtime this weekend to help enforce the blacklist, while JPMorgan Chase ramped up its sanctions enforcement team in London and the US to make sure money taps were being turned off.
Goldman Sachs disclosed on Friday that its investments in Russia amounted to more than $1bn (£793m), of which more than half were related to loans and loans to Russian-linked businesses. It is unclear whether Wall Street Bank intends to exit those positions.
“Banks have extensive business relationships with companies that deal not only with the UK but across Russia Europesaid Benjamin Enser, director of research and strategy at fintech consultancy 11:FS. “How decoupling works, and how quickly it happens, depends on the extent of the restrictions and how much the conflict escalates.”
Even implementing the block on SWIFT – the main messaging system used to make cross-border payments – has been a “maze”, the executive said. “It’s not as simple as turning the system on or off,” he said. “There may be a process, but over time more capillaries will reveal themselves.”
Meanwhile, the investment association trade body is approaching fund managers as they try to assess their exposure to Russia and offload stake in approved firms. But some of its members are already struggling. Abrdn, which manages £465.3bn in assets for its clients, has so far failed to sell its £5m stake in Rosneft due to new Russian regulations that bar foreigners from trading on its Micex stock exchange.
Widespread sanctions could cause problems for a wide range of British companies. Russia’s large population of 144 million people has made it an attractive market for some of Britain’s best-known consumer brands, including Marks & Spencer, which has 32 stores in Moscow alone.
Unilever, a London-headquartered consumer goods company selling products ranging from Dove soap to Marmite, has a subsidiary in Russia with registered offices in Moscow and Omsk, but declined to provide any details of its workforce or its operations in the country. has refused. ,
While Ben & Jerry’s ice cream brand criticized the US government’s approach to talks with Russia earlier this month, Unilever chief executive Alan Jopp criticized the interference. The FTSE 100 firm only said that it is “looking with concern and focused on the safety of our people”.
Mining companies listed in London are still in the limelight after UK and US politicians said they would target resource-heavy industries with the new sanctions.
While FTSE 100 member Polymetal International, which operates gold mines in Russia and Kazakhstan, has not been named as a potential target of sanctions, its shares fell 56% on Monday.
Shares of steel producer Average, which is listed on the FTSE 100 but has major mining and processing operations in Russia, also declined 29%. Before the Russian invasion of Ukraine, lawyers for Avraz’s largest shareholder, Chelsea Football Club owner Roman Abramovich, disputed whether he or Avraz fit the criteria for a possible designation for sanctions.
Other companies that have quietly invested in the Russian market in recent years are expected to begin disclosing their positions — and any associated financial risks — to investors in the coming weeks.