How much money do the energy ‘giants’ lose by leaving Russia?

The oil and gas “giants”, who rushed to suspend their activities in Russia after the invasion of Ukraine in late February, now warn that their exit from the Russian market will result in losing billions of dollars.

Last Thursday, Shell revealed that the suspension of its operations in Russia could cause losses of up to $ 5 billion in the quarterly results it is expected to announce.

Following Vladimir Putin’s invasion of Ukraine, Shell has parted ways with Russian state-owned gas company Gazprom and terminated its participation in the Nord Stream 2 gas pipeline.

In turn BP “gets rid” of its share – about 20% – to Russian oil producer Rosneft and warns that its losses could reach up to $ 25 billion.

US energy giant Exxon Mobil has also suspended operations in Russia and is withdrawing shares estimated to be worth about $ 4 billion by the end of 2021, while Norwegian oil and gas company Equinor “leaves on the table” about 1, $ 2 billion in Russian investment.

Wall Street analysts and investors continue to weigh the impact of Western companies’ exit from Russia as part of tougher sanctions on Moscow, with Joe Biden signing the Russian energy embargo decree. , which was approved by the Senate on Thursday.

In the short term, however, these losses will be mitigated by the rally in oil and gas prices with the industry. to attract the interest of legendary investor Warren Buffett and his Berkshire Hathaway Group.

The energy sector of the S&P 500 has strengthened by about 40% since the beginning of the year, far exceeding the performance of the broader index, which is declining by 6% over the same period. So far in 2022 the share of BP gains more than 11%, Shell adds 26%, ExxonMobil records a rally of 37% and the biggest gains are recorded by Equinor with a jump of 46%.

The energy “giants” will provide more details about the negative – financial – impact from the cessation of their activities in Russia on the quarterly results that will be announced in May. Despite leaving Russia, most companies are expected to show strong profits in the first quarter of 2022, mainly due to rising oil and gas prices.

Russia’s invasion of Ukraine has hit energy markets, sending oil prices soaring to $ 130 a barrel in March, although they have fallen since then. After weeks of volatility, West Texas Intermediate crude is currently trading at $ 98 a barrel, while Brent crude is near $ 103 a barrel.

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Source: Capital

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