Shell, the British energy giant, said that it expects to lose up to $5 billion in the first quarter of 2022 as a result of its decision to leave Russia. This development is in dissent to Vladimir Putin’s invasion of Ukraine as companies around the world sever ties with Moscow. Shell said it anticipates a post-tax impairment ranging between $4 billion and $5 billion of assets and charges related to credit losses and contracts in Russia in the first quarter of 2022, which topples its previous estimate of $3.4 billion.
Shell is not the only energy company that has been impacted: BP has estimated that it will face a loss of up to $25 billion as a result of its exit from Russia, owing primarily to foreign exchange losses and the loss of its stake in Russian oil giant Rosneft, which accounts for roughly one-third of its oil and gas production. ExxonMobil is also bracing for losses in Russia, which is estimated around $4 billion if a drilling operation is abandoned.
Total Energies, a French company has been chastised for not fully departing Russia and for refusing to write off its assets like some of its competitors, which CEO Patrick Pouyanne defended, stating that doing so effectively meant giving them to Putin for “free.”
Shell purchased a cheap cargo of Russian oil just weeks into Russia’s invasion of Ukraine, explaining the move on the necessity to keep European fuel supply stable, according to Forbes. Shell was heavily criticized for its decision, and it quickly backtracked and apologized, agreeing to stop importing Russian oil and gas and to wind down its operations in Russia. While energy corporations are facing billions of dollars in write-downs due to Russian assets, the recent increase in oil and gas prices has many companies expecting big profits. Shell expects oil trading earnings to be “substantially higher” in the third quarter, as well as liquid natural gas earnings to be higher than the previous quarter. As Americans battle with high fuel prices, lawmakers in the United States have slammed the industry for suspected profiteering, with prices at the pump continuing high despite falling crude prices.
Source: Oriental News
