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President Vladimir Putin has approved Baker Hughes’ plan for exiting Russia through the transfer of its assets in the country to a special-purpose vehicle set up earlier this year.
Upstream Online reported that last week, the president issued a decree for the purchase of Baker Hughes’ controlling stakes in nine Russian companies by Nefteservisnie Tekhnologii—the new entity.
The new entity, according to Russian media, is owned by three people with equal, 33.33-percent shares. All are former Baker Hughes employees.
Baker Hughes said it would sell its Russian business operations to its local managers earlier this year amid an exodus of Western companies from the Russian market.
Halliburton’s exit from Russia also took the form of a sale of the business to local managers of the company. Like Baker Hughes, the new company operates independently of the former parent, under a different brand.
The Upstream report notes that oilfield service providers have taken longer than the supermajors to wrap up their Russian businesses because it has been very lucrative for them. EU and U.S. sanctions on Moscow have made it challenging to operate normally in the country.
There have been expectations that the exit of Western companies from Russia’s hydrocarbons sector would lead to a decline in production and indeed this exit might contribute to an already evident decline. In October, Russia produced some 9.9 million bpd of crude oil, substantially below its OPEC+ quota of 11 million bpd.
The quota, by the way, is being reduced to 10.5 million bpd for this month, per the latest OPEC+ agreement on output control.
Total crude oil - plus condensate - production this year, however, is seen rising to 525-530 million tons, compared with 524 million tons in 2021. Next year, on the other hand, oil and condensate production is expected to fall to 490 million tons.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com