Shell is counting the cost of its retreat from Russia. The tally could be as high as $5bn, it said on Thursday. That will not faze investors. Rival BP’s writedowns could be five times as big. But Shell’s exit could be more complicated. It may also have a bigger impact on Russia’s future ability to exploit its energy assets.
Shedding a shareholding in a Russian company, as BP intends to do with Rosneft, is irksome. But it is simpler than walking away from operational assets. As much as half of Shell’s expected $4bn to $5bn of writedowns relates to partnerships with Gazprom, including its 27.5 per cent stake in the Sakhalin-2 liquefied natural gas facility.
The remainder includes a 10 per cent stake in the Nord Stream 2 pipeline project, $400mn worth of downstream operations and — as revealed on Thursday — up to $1.6bn of other items, such as unpaid contracts.