Shell announced it will quit all joint-ventures with Russian gas giant Gazprom, including a joint venture at a major liquefied natural gas plant Sakhalin-II. The company said it also plans to end its involvement in the controversial Nord Stream 2 pipeline from Russia to Germany in which it holds a 10 percent stake worth around £746m.
Shell said it would “exit its joint ventures with Gazprom and related entities” which are reportedly worth around £2.2bn.
The oil giant follows rival BP which announced it would pull out of its ventures with Russia yesterday in a major blow to the oil-rich country.
BP abandoned its stake in Russian-controlled oil company Rosneft on Sunday in a move that could cost Russia over £18bn.
Shell Chief Executive Ben van Beurden said in a statement: “We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security.”
“Our decision to exit is one we take with conviction.”
He continued: “We cannot – and we will not – stand by. Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia.
“In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”
Shell said it was selling its 27.5 percent stake in Sakhalin-II in Russia as well as a 50 percent stake in Salym Petroleum Development N.V, a joint venture with Gazprom that is being developed in Siberia.
The company also announced it was ending its involvement in the Nord Stream 2 gas pipeline which was recently halted by Germany in response to Russia’s invasion of Ukraine.
The pipeline had been due to see gas imports to Germany from Russia double.
Shell said it would work with aid partners and humanitarian agencies to help support Ukraine.
The organisation said it had around $3bn (£2.2bn) in “non-current assets” through its ventures with Gazprom at the end of 2021.
It said: “We expect that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s Russia assets and lead to impairments.”
Britain’s business secretary Kwasi Kwarteng congratulated Shell on its decision.
Mr Kwarteng tweeted: “Earlier today I spoke to Shell’s chief executive, Ben van Beurden,”
“Shell have made the right call to divest from Russia – including Sakhalin II. There is now a strong moral imperative on British companies to isolate Russia.”
“This invasion must be a strategic failure for Putin.”
Shell’s rival BP announced it would offload its 19.75 percent stake in the state-owned Russian company Rosneft “with immediate effect” on Sunday following Russia’s attack on Ukraine.
The company’s chief executive Bernard Looney is also resigning from Rosneft’s board along with its other Rosneft director Bob Dudley, BP said in a statement.
Pressure is now mounting on other oil companies to follow suit.
Many of the largest oil companies in the world including TotalEnergies, ExxonMobil, Mitsui & Co., and Mitsubishi Corp all hold large stakes in Russian energy projects.