Shell joined BP in announcing it will leave all its Russian operations, including a major liquefied natural gas plant, following on Moscow's invasion of Ukraine. Earlier BP also abandoned its share in Russian oil giant Rosneft, a move that could cost the British company over US$25 billion.
Norway's Equinor, majority-owned by the Norwegian state, also said that it would start divesting from its joint ventures in Russia. That came after the country's sovereign wealth fund, the world's largest, said on Sunday it would divest its Russian assets.
Shell said in a statement it will quit the flagship Sakhalin 2 LNG plant in which it holds a 27.5% stake, and which is 50% owned and operated by Russian gas giant Gazprom .
Shell said the decision to exit Russian joint ventures will lead to impairments. Shell had around US$ 3 billion in non-current assets in these ventures in Russia at the end of 2021, it said.
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, Shell Chief Executive Ben van Beurden said in a statement.
Rival BP's Chief Executive Bernard Looney called an urgent meeting with his leadership team last Thursday, just hours after the first Russian bombs fell on Ukrainian capital Kyiv. During the meeting, Looney made it clear the company's investment in Rosneft had become untenable, the sources said.
There was only one decision we could make, a BP source said. The exit was the only viable way.
Looney held two more board meetings at the weekend, after which board members voted to immediately exit the Rosneft stake.
Looney also spoke to British Business Secretary Kwasi Kwarteng on Friday, when Kwarteng expressed his concern about BP's interests in Russia. Kwarteng welcomed BP's decision to exit on Twitter on Sunday. Kwarteng had a similar message for Shell on Monday.
The Sakhalin 2 project, located off Russia's northeastern coast is huge, producing around 11.5 million tons of LNG per year, which is exported to major markets including China and Japan.
For Shell, the world's largest LNG trader, leaving the project deals a blow to its plans to supply gas to fast-growing markets in the coming decades. Shell said the Russia exit will not affect its plans to switch to low-carbon and renewable s energy.