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ENERGY NEWS
The Russian invasion of Ukraine and its consequences on the energy markets with skyrocketing prices, supply deficit, and international majors announcing they would pull out of Russia was the biggest theme in the European energy market in the past month. The war also threw the progress to net-zero emissions and ways to reduce Europe’s dependence on Russian oil and gas into sharp relief.
Europe
Energy Review By Tsvetana Paraskova
Oil & Gas Days after Russia invaded Ukraine, the top European oil and gas firms raced to announce they are withdrawing from joint ventures and assets in Russia. UK supermajor bp was the first to announce it would divest from Russia. In just a few days, many other Western oil majors followed suit. bp said it would divest its 20% stake in Russian giant Rosneft. bp chief executive Bernard Looney resigned from the board of Rosneft with immediate effect. The other Rosneft director nominated by bp, former bp CEO Bob Dudley, also resigned from the board. As a result of the exit from Rosneft, bp expects to report a material non-cash charge with its first quarter 2022 results, probably around $25 billion. The war in Ukraine “has caused us to fundamentally rethink bp’s position with Rosneft. I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of bp,” CEO Looney added. Shell also said it would exit its equity partnerships with Gazprom entities, including the Nord Stream 2 gas pipeline project, its 27.5% stake in the Sakhalin-II LNG facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture. “We cannot – and we will not – stand by,” Shell’s CEO Ben van Beurden said, referring to Russia’s invasion of Ukraine as “a senseless act of military aggression which threatens European security.” A few days later, Shell apologised for buying Russian oil after the war broke out and said it intended to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased
www.ogv.energy I April 2022
manner, aligned with new government guidance. As an immediate first step, the company will stop all spot purchases of Russian crude oil. It will also shut its service stations, aviation fuels and lubricants operations in Russia. Norway’s Equinor also decided to stop new investments into Russia, and to start the process of exiting its Russian joint ventures. Equinor will not enter any new trades or engage in transport of oil and oil products from Russia, the company said, noting that it would complete the delivery of four cargoes in March, contracts for which it had signed in January. TotalEnergies of France also condemned the Russian invasion but stopped short of announcing a withdrawal. TotalEnergies will no longer enter into or renew contracts to purchase Russian oil and petroleum products, in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 at the latest. The company, which does not operate any oil and gas fields or any LNG plants in Russia, said it would provide no further capital for the development of projects in Russia.
TotalEnergies, however, will not be trying to divest its minority stakes in Russian assets because “The current environment of European sanctions and Russian laws controlling foreign investments in Russia would prevent TotalEnergies to find a non-Russian buyer for its minority interests in Russia. Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions' purpose.” Wintershall Dea wrote off financing of Nord Stream 2 and will not advance or pursue additional projects in Russia. OMV of Austria said it would no longer pursue investments in Russia, and will undertake a strategic review of its 24.99% interest in the Yuzhno Russkoye field. This review comprises all options including possibilities to divest or exit. Supply concerns and Vladimir Putin’s idea that “hostile” countries – including all of the EU and the UK – should pay in Russian roubles for gas sent European gas prices to record highs, while the UK and the EU were drafting strategies to reduce and eventually eliminate dependence on Russian energy supply. The European Commission proposed a plan to make Europe independent from Russian
