Western companies were quick to announce their full departures from Russia or a suspension of operations in the country – and now the bills are starting to come in.
Among the first to pull out of what is fast becoming a pariah state were the UK oil majors BP and Shell and, in terms of the financial hits being taken in the retreat from Moscow, they are facing the most pain.
Shell today made an attempt to put a number on that by warning that it faces write-downs of between $4-$5bn after exiting Russia.
Its interests there were substantial and included a 27.5% stake in Nord Stream 2, the now redundant new gas pipeline linking Russia and Germany; and its 27.5% stake in Sakhalin-2, the giant offshore gas field in Russia’s far east that supplies about 4% of the world’s liquefied natural gas.
These ventures were previously valued in Shell’s accounts at $3bn. Now, though, the company has concluded the cost will be higher of exiting these investments and other actions including stopping buying Russian crude, closing its petrol stations in the country and closing its aviation fuels and lubricants businesses in Russia.
The higher sum also takes account of the fact that Shell may not now be paid some money it is owed in Russia. It is this latter issue that is thought to be chiefly behind today’s upwards revision.
While shares of Shell – which have risen by 31% since the beginning of the year and are just under 10% since the beginning of the war – initially fell by 2%, the good news, so far as investors will be concerned, is that the charges will not impact adjusted earnings for the first three months of the year.
That is largely because, thanks to higher oil and gas prices, Shell’s trading profits for the first three…
Source : skynews
