June 14, 2024

Putin is making it harder for foreign companies to exit

Putin is making it harder for foreign companies to exit


In exceptional cases, Vladimir Putin can grant special permits.

(Photo: IMAGO/SNA)

Riga Kremlin boss Vladimir Putin is making it harder for some foreign oil companies and banks to exit business with Russia. Until December 31 this year, investors from countries Russia classifies as “unfriendly” will be barred from trading shares in some strategically important Russian energy and financial companies.

The Russian president signed the decree last Friday. This group of states includes all European Union countries, the United States, the United Kingdom, South Korea and Taiwan.

Transactions of securities constituting registered capital, as well as rights and obligations or shares and contracts, on the basis of which investment projects are implemented in Russia, are affected by the ban.

However, the decree gives the president a special role: in exceptional cases, as the document shows, Putin can issue special permits. Transactions that expire in violation of the ban will no longer be considered valid.

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The government has now been given ten days to submit a list of affected companies to Putin for approval. However, two initiatives are explicitly mentioned in the text: first, Sakhalin I, a project to produce oil and natural gas near Sakhalin Island in the Pacific Ocean, and second, the Sharjah oil field in northern Russia.

Russian Oil: ExxonMobil and Total Holdings want to divest

In the case of Sakhalin I, Exxon Mobil, the American oil company that operates the field, is particularly affected. The agency announced on March 1 that it was moving to withdraw from the program in response to Russia’s February 24 attack on Ukraine.


Oil barrels

per day, which the American company Exxon Mobil recently produced from the Russian oil field Sakhalin I.

Days before the decree was issued, Exxon said it was in talks to transfer its 30 percent stake in Sakhalin I to an unnamed company. The oil company produced about 227,000 barrels per day last year.

The much smaller Sharjah oil field produced about 31,000 barrels per day last year. France’s Total Energies announced in July that it would transfer its 20 percent stake in the sector to Russian state-owned oil company Zarubezhneft. Norway’s Equinar, which owns 30 percent, said it would exit the field at the end of May.

>> Read here: “HSBC sets a precedent”: Moscow wants to prevent foreign credit institutions from withdrawing

Because of Russia’s aggression against Ukraine, foreign banks affected by the order have been trying to get further out of Russia for some time. But the Russian government is preventing foreign credit institutions from withdrawing.

Major British bank HSBC announced at the end of July that it wanted to sell its Russian business to Expobank. At the time, it said the transaction still needed to be approved by Russian authorities to complete. No decision has been taken on this yet.

Further: “Times are getting very bad” – Europe’s banks fear foreclosure in Russia.

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