BP and Shell lead rush to exit Russia. There can be no going back

theguardian.com:

First BP, now Shell. The rush to disinvest from Russia is impressively quick since it’s possible to imagine an alternative script in which the oil companies’ boards tried to buy time by issuing woolly “all options are open” statements. A definitive statement to sell its 20% stake in Rosneft (in BP’s case) and ditch all partnerships with Gazprom (Shell’s position) leaves no ambiguity. There can be no going back.

The mechanics of the exit are yet to be determined, and BP’s route to disentanglement is probably simpler. The company has had a wild ride in Russia over the years (one minute it was fighting local oligarchs, the next it was in partnership with them), but since 2013 it has been reduced to the role of dividend-collecting passive investor in Rosneft. So it can either seek a buyer or accept whatever token sum of devalued roubles that the Russian company cares to offer. The latter looks more likely.

Shell, by contrast, is an active participant in the Sakhalin-2 project that produces about 4% of the world’s LNG and is crucial to Russia’s efforts to develop Asian markets. The joint-venture structure, where Gazprom is the 50% owner, will be harder to dissolve, but, at this point, the intention to exit is what matters.

As significant is Shell’s scrapping of a five-year “strategic cooperation agreement” with Gazprom that was signed only last year. That cosy working relationship with Russia’s biggest energy company could not possibly continue. The same goes for the now-ditched involvement in the Nord Stream 2 pipeline.

The hit to BP’s share price on Monday was a modest 4% by the close of trading. The message in that movement is that BP can easily afford to say goodbye to its stream of Rosneft dividends for zero compensation. BP