There’s nothing brave about BP deciding to walk away from Rosneft, the Russian polluter with the name that literally means “Russian oil.” On Sunday, the company released a statement saying it would “exit” from its shares in the company, of which it has had a 19.75% stake since 2013. BP CEO Bernard Looney will be resigning from the Rosneft board, as will former BP executive Bob Dudley. In a statement, Looney said he was “deeply shocked and saddened by the situation unfolding in Ukraine,” but added that leaving the Rosneft board and doing God knows what with its shares is a sound business decision. “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,” Looney noted. For what it’s worth, BP’s stock has slumped nearly 7%, but the company’s move does put the pressure on other industry giants to follow suit. ExxonMobil and Shell also have major presences in Russia: A subsidiary of ExxonMobil has a 30% stake in Sakhalin-1, an oil and gas project run by a consortium that includes two subsidiaries of Rosneft; Shell’s 27.5% stake in Sakhalin-2 positions it as the project’s second-largest shareholder.
Sakhlain-2 is controlled by Gazprom, which produces 11% of the world’s gas output. Gazprom is the third-largest oil company in Russia, while Rosneft is the country’s largest, according to Investopedia. Both have tumbled on the London Stock Exchange and New York Stock Exchange as Russia continues to attack Ukraine. Were ExxonMobil and Shell to get rid of their shares in oil and gas consortiums in Russia, both Gazprom and Rosneft could see even larger losses. But they could also bounce back fairly quickly if those abandoned shares find the right buyer. As Bloomberg’s Julian Lee notes, BP may choose to either sell its shares or walk away and let Rosneft do the selling. But there is another solution on the table. Lee proposes transferring “the holding to a trust … [that] would need to be completely separate from the company, as BP probably cannot be seen to have any involvement with its Russian investment. And the trust ought to have a humanitarian objective, given the circumstances of its creation.”
It remains to be seen what BP will ultimately do with its Rosneft shares, but even making this type of gesture is more meaningful than anything proposed by the Biden administration when it comes to Russian oil and gas. Biden has made it clear he’s uninterested in cutting off Russian energy for fear of just how high prices at the pump could get for U.S. citizens. Bill McKibben provides a great context as to why this not only isn’t asking too much, but that sanctioning Russian oil and gas could provide the perfect opportunity to more strongly pivot to eco-friendly options in a way that actually does hit emissions goals the president has previously laid out:
“The last time a European autocrat sent tanks speeding across the plains to subjugate sovereign nations we (eventually) responded by sending millions of men off to war and sacrificing everything about our domestic economy in order to produce the armaments needed to fight. This time America’s burden involves… paying higher gas prices. And for many that’s too much. Continuing the uninterrupted enjoyment of our national fleet of grotesquely oversized SUVs and pickups is more important to some significant part of our population than standing beside brave people running real and terrible risks. There are Americans who can’t afford the fuel to heat their homes—we need to assist them… President Biden is warning the oil companies not to price-gouge, but of course they will—we need to break their power. And one way to do that is to quickly build out clean energy technology, everywhere we can.”
With the latest International Panel on Climate Change (IPCC) report warning that continuing down our path of relying on fossil fuels has dire consequences for the planet, imposing sanctions against Russia could be the exact opportunity to take the IPCC’s findings into consideration and take a stand in support of Ukraine, a country that has suffered severely from polluters and is only getting worse with conflict.
Monday, Feb 28, 2022 · 6:10:50 PM +00:00
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April Siese
On the heels of BP’s announcement, Shell has indicated it will “exit its joint ventures with Gazprom and related entities, including its 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture,” according to a press release. “Shell also intends to end its involvement in the Nord Stream 2 pipeline project,” the company added. The Nord Stream 2 pipeline project was completed last September; its future is so uncertain due to Russia’s actions in the Ukraine that one of its main partners, the Austrian company OMV, is holding a crisis meeting about it today.
What exiting those ventures looks like remains to be seen, though Shell says it will work with relief and humanitarian organizations that are aiding Ukraine. As of this writing, there’s been a small dip to Shell’s stock, though not nearly as severe as with BP when the company made its announcement. Finances tend to be at the top of polluters’ minds when it comes to these types of decisions, on top of what makes a company look good. The fact is that Shell remains one of the largest polluters in the oil and gas sector. The company’s emissions account for around 4.5% of the world’s energy-related greenhouse gas emissions.