Norway oil giant to start exiting from joint ventures in Russia

[OSLO] Norway's biggest energy company Equinor joined UK energy giant BP in starting to withdraw from Russia in response to the invasion of Ukraine.

Both companies told investors to brace for a financial impact. Equinor, which is 67 per cent state owned, said in a statement on Monday (Feb 28) that the decision to pull out from joint ventures in Russia will affect the book value of its assets in the country and lead to impairments, without quantifying the size of the hit.

The company had US$1.2 billion in non-current assets in Russia at the end of 2021. BP on Sunday estimated there could be a writedown of as much as US$25 billion. "In the current situation, we regard our position as untenable," chief executive officer Anders Opedal said. "We will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values."

The decisions come after a slew of measures to isolate the Russian economy. The Norwegian government announced late on Sunday that it plans to remove Russian assets from its US$1.3 trillion sovereign wealth fund, and western governments levied sanctions. BP moved to dump its shares in oil giant Rosneft PJSC, without saying whether it was planning to sell its roughly 20 per cent stake in Rosneft, or simply walk away. It also said that it will also exit its other business in Russia, which include three joint ventures with a carrying value on its books of about US$1.4 billion.

BP had the largest interest in Russian oil and gas, but its Big Oil peers also hold important stakes in the country. TotalEnergies' operations in Russia represent around US$1.5 billion of its total cash flow, or around 5 per cent.

Equinor has been in Russia for more than 30 years and entered into a cooperation agreement with Rosneft in 2012. The Norwegian oil company said in 2020 that it planned to more than double its oil production in Russia after buying a stake in a Rosneft project in East Siberia for about US$550 million.

BLOOMBERG