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Russia banned companies from what it considers “unfriendly” countries from selling stakes in key energy projects and oil and gas production sharing agreements by the end of the year under a new decree signed by Vladimir Putin on Friday.
Russia is thus upping the ante in the standoff with the West, which has imposed massive sanctions on Russia. The U.S. has already banned imports of Russian energy, including oil, natural gas, and coal, while the EU plans to enact an embargo on seaborne imports of Russian crude oil and refined products at the end of this year.
Western majors hastened to announce they are abandoning joint projects in Russia after Putin invaded Ukraine at the end of February. Some international companies have managed to exit their participation, such as Norway’s Equinor, which said at the end of May that “The exit from all Joint Ventures has been completed in accordance with Norwegian and EU sanctions legislation related to Russia.”
Shell has already completed the sale of its retail and lubricants businesses in Russia to Lukoil, but hasn’t exited the Sakhalin-2 LNG project yet.
Earlier this week, the Russian government gave Sakhalin-2 minority foreign investors – Shell, and Japan’s Mitsui & Co and Mitsubishi – one month to claim their stakes in a new entity that will replace the existing project. Shell has confirmed it is looking at ways to exit the project. The Japanese companies are expected to continue to keep their stakes, Japan’s Industry Minister Koichi Hagiuda said on Thursday, as carried by Reuters.
U.S. supermajor ExxonMobil, for its part, has said it would quit the Sakhalin-1 oil project in Russia and has said it is in the process of transferring the 30% stake “to another party.” Russian giant Rosneft blamed Exxon on Thursday for the low oil production at the Sakhalin-1 project.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com