Page 6 - AsianOil Week 11 2022

AsianOil COMMENTARY AsianOil

Who will replace Western

IOCs in Russia?

The assets could be nationalised, and meanwhile Chinese and Indian

investors could be waiting in the wings

INVESTMENT WESTERN international oil companies (IOCs) commercial environment is particularly chal-
that have been working in Russia for decades lenging,” Rystad notes, yet the consultancy
WHAT: have announced plans to either scale back or assumes that those that desire to leave will do
All Western majors withdraw entirely from the country in the wake so eventually, “as increased geopolitical and
involved in Russia have of Moscow’s invasion of Ukraine. This raises the reputational risks may prevail in the short to
announced plans to exit question of who will step in to replace them. medium term.”
or scale back in the BP, Equinor, Eni, ExxonMobil and Shell have “If the ban is imposed, the exodus of foreign
country. all said in the last few weeks they will leave Rus- companies from Russia may be stalled for a
sia, while others like OMV, TotalEnergies and while, but the bigger sales will most likely go
WHY: Wintershall Dea have said they will refrain from ahead, opening opportunities for other foreign
IOCs face mounting further investments in the country. investors.”
pressure to quit ties with “The exodus of international majors from Rystad warns that these foreign-owned
Moscow over its invasion Russia appears to have taken their partners and stakes will almost all be sold off at a huge dis-
in Ukraine. the Russian state itself by surprise,” Norwegian count to their real value, and some may be
consultancy Rystad Energy notes in a research nationalised by the state through acquisition.
WHAT NEXT: note. The Kremlin has warned that it could seize
Chinese and Indian Russia’s government has responded by assets, although Rystad sees this as a less likely
investors are seen as imposing a temporary ban on any merger and scenario.
favourites to replace acquisition activity to prevent the companies “This measure may be taken in response
them. from leaving too quickly. It has done so to avoid to similar actions taken in countries that the
any operational disruptions as a result of their Kremlin views as ‘unfriendly’, if it is taken at all,”
departure, and give companies and business Rystad says. “BP’s near 20% stake in Rosneft is
owners time to assess the current market land- the most likely candidate due to the magnitude
scape and weigh up their decisions, which the of the stake and the existing presence of the state
Kremlin views as political in nature. in the company’s ownership. A similar scenario
“Predicting the actions of oil and gas indus- could materialise for the Sakhalin-1 and Sakha-
try players in the current geopolitical and lin-2 projects.”

P6 www. NEWSBASE .com Week 11 18•March•2022