Despite pledges from numerous international oil majors to leave Russia, this is easier said than done, and companies from the U.S. and the UK are still stuck with their Russian assets, Patrick Pouyanne, CEO at TotalEnergies, said on Wednesday.
In the days after the Russian invasion of Ukraine began, UK's BP and Shell said they would divest their Russian assets and stop trading with Russian oil.
The war in Ukraine "has caused us to fundamentally rethink bp's position with Rosneft. I am convinced that the decisions we have taken as a board are not only the right thing to do, but are also in the long-term interests of bp," BP's chief executive Bernard Looney said just days after the invasion.
U.S. supermajor ExxonMobil said it would discontinue operations at Sakhalin-1 and will make no new investments in Russia, deploring "Russia's military action."
Only TotalEnergies has not announced an immediate withdrawal from Russia, drawing a lot of criticism from investors and campaigners.
"Everybody's telling me that my Anglo-Saxon competitors are leaving," TotalEnergies's CEO Pouyanne told France's RTL radio today. "None of my competitors has left Russia, and knows how to leave Russia," he added.
"Do you want me to abandon assets in Russia to enrich Russians whom we have placed under sanctions? I won't give in to it, because that's demagogy," said Pouyanne, as quoted by Bloomberg.
On Tuesday, TotalEnergies shared its view and steps it had taken regarding its business in Russia "after the serious and unfounded accusations of "complicity in war crimes" leveled against TotalEnergies."
Condemning the Russian invasion of Ukraine once again, the company said it would not provide further capital for the development of projects in Russia, and it would no longer enter into or renew contracts to purchase Russian oil and petroleum products, "in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 at the latest."
TotalEnergies said it does not operate any oil and gas fields or any liquefied natural gas (LNG) plants in Russia.
Moreover, the company said that "The current environment of European sanctions and Russian laws controlling foreign investments in Russia would prevent TotalEnergies to find a non-Russian buyer for its minority interests in Russia. Abandoning these interests without consideration would enrich Russian investors, in contradiction with the sanctions' purpose."
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By Tsvetana Paraskova for Oilprice.com
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BP was the first Western oil major to announce its decision to divest of almost 20% investment in Russia’s oil giant Rosneft. This is the most lucrative investment BP currently has. However, BP may not be able to sell its share in Rosneft to a non-Russian buyer which could mean that either Rosneft or the Russian government could buy BP’s share on the cheap. This could cost BP an estimated $25 bn according to the Wall Street Journal.
The same happened with ExxonMobil when sanctions were imposed on Russia in 2014 in the aftermath of its annexation of the Crimea. Exxon was not given a waiver to continue operating in a joint project with Rosneft in Russia’s Arctic and was forced to withdraw from the country at considerable losses.
In the aftermath of Exxon’s departure, Russian oil companies jointly developed a homegrown state-of-the-art technology to continue developing Arctic oil and gas reserves and the Russian government poured hundreds of billions of dollars into these projects. By 2024 Russia will be adding 1.5 million barrels a day (mbd) to its production while Novatek has become a major LNG producer and exporter on its own.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London