Page 6 - GLNG Week 09 2022

GLNG COMMENTARY GLNG

Exodus of Western majors

from Russia begins

Russia’s oil industry could suffer the biggest ever withdrawal of

foreign investment in a short period

INVESTMENT INTERNATIONAL oil companies (IOCs) have various upstream assets in Russia with those of
started announcing plans to exit Russia, poten- local investor TNK in 2003 to form TNK-BP.
WHAT: tially marking the biggest ever withdrawal of for- TNK-BP was sold in 2013 to Rosneft for $55bn,
BP and Equinor have eign investment from the country’s oil and gas giving BP its current shareholding in the
both announced they will industry during such a short period. national oil company.
withdraw from Russia. The relationship between BP and Rosneft
BP calls time on Russia lasted over the years because it was mutually
WHY: BP was the first to unveil plans to pull out of Rus- beneficial. On the one hand, BP benefitted from
Western majors have sia in light of Moscow’s invasion of Ukraine. The Russia’s low-cost production, helping it drive
quit in light of Moscow’s company has a 19.75% interest in Russia’s largest growth elsewhere in its portfolio. The company
invasion of Ukraine. oil company Rosneft, run by influential Krem- had been banking on its Russian assets to gen-
lin ally Igor Sechin. In an email to employees on erate the capital necessary to rapidly build up its
WHAT NEXT: February 27 seen by NewsBase, CEO Bernard energy transition business, under an ambitious
More IOCs face pressure Looney said that he had been “deeply shocked strategy it unveiled in 2020.
to withdraw, and the and saddened by the situation unfolding in On the other hand, Rosneft relied on BP for its
exodus will leave Russia Ukraine.” advanced technology and equipment, its expe-
even more dependent on “In the hours and days since military action rience and its financial clout, which has helped
Russia for economic and began, we have been fundamentally rethinking it take projects forward that would otherwise be
political support. our position with Rosneft,” Looney said. considered too complex or costly to develop.
BP plans to divest its shareholding in Rosneft,
and until a buyer is secured, it will not include Equinor follows suit
any production and profits from the Russian Rosneft has likewise reached out to Equinor to
company in its results. Looney and former BP help it exploit some of Russia’s more challeng-
head Bob Dudley will also step down from Ros- ing oil players. But the Norwegian company too
neft’s board. decided to withdraw on February 28.
In a statement online, BP said that having a In a statement, Equinor CEO Anders Opedal
stake in Rosneft no longer aligned with its busi- said the company was “deeply troubled by the Shell played an
ness and strategy, and that a divestment was in invasion of Ukraine, which represents a terrible
the best long-term interests of shareholders. setback for the world, and we are thinking of all integral role in
BP chairman Helge Lund made the UK major’s those who are suffering because of the military jump-starting
position on the Ukrainian conflict clear. action.”
“Russia’s attack on Ukraine is an act of aggres- The conflict in Ukraine has made Equinor’s Russia’s LNG
sion which is having tragic consequences across activities in Russia “untenable,” he said. Not only
the region,” he said. “This military action repre- will the company cease investing in the country, sector.
sents a fundamental change. It has led the BP but it will also begin the process of withdrawing
board to conclude, after a thorough process, our from its existing joint ventures there.
involvement with Rosneft, a state-owned enter- Equinor has been working in Russia since
prise, simply cannot continue.” 2013, once again primarily with Rosneft. At
BP also said it would withdraw from its the end of 2021 it had $1.2bn of assets in the
various upstream joint ventures with Rosneft country, from which it nets a combined 25,000
in Siberia. They include Taas-Yurakh, Yer- barrels of oil equivalent per day (boepd) in pro-
mak-Neftegaz and Kharampur. duction. These assets include its joint ventures
BP has been working in Russia for over 30 with Rosneft in east and west Siberia and in the
years, having opened its first office in the coun- Volga-Urals formation, and its 30% stake in
try in 1990. Its biggest early upstream invest- the Zarubezhneft-operated Kharyaga produc-
ment was the acquisition in 1997 of a 10% stake tion-sharing agreement (PSA) in the northern
in Sidanco, which at the time was the country’s Timan-Pechora basin.
fourth-largest oil company. BP combined its As was the case with BP, Equinor was

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