Two energy giants pull billions in investments out of Russia

Two oil and gas giants are pulling out of investments in Russia following the invasion of Ukraine, decisions that could have ripple effects across the world.

On Sunday, British Petroleum announced plans to exit its shareholder position with Rosneft, a Russian state-controlled oil and gas company. BP has held a 19.75% stake in Rosneft since 2013. That stake is currently valued at $14 billion.

“Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected. It has caused us to fundamentally rethink BP’s position with Rosneft,” BP CEO Bernard Looney said in a statement.

Russia is the world’s third-largest oil producer behind only the United States and Saudi Arabia, according to the U.S. Energy Information Agency. Russia’s oil production accounts for 11% of the world’s total.

BP had recently come under pressure from the UK government to offload its stake in Russia, according to the BBC. Prior to exiting its position, BP was one of the biggest foreign investors in Russia, per the company’s website.

Just one day later, Shell announced it intends to exit its joint ventures with Russia’s state-owned energy giant Gazprom. That includes a 27.5% stake in Sakhalin-2, a key liquefied natural gas project, as well as 50% stakes in two projects that are developing oil fields in western Siberia.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” Shell’s CEO Ben van Beurden said in a statement.

Shell also said it intends to end its involvement in the Nord Stream 2 natural gas pipeline. The controversial undersea project directly links Russian gas to Europe through Germany.

British Petroleum and Shell, both based out of the UK, are the largest energy companies to divest from Russia so far.

Texas-based ExxonMobil is also heavily invested in Russia but has yet to say whether it will sever ties. The company’s subsidiary Exxon Neftegas Limited (ENL) has a 30% stake in the Sakhalin-1 drilling project, which the company touts as “one of the largest single international direct investments in Russia.”

President Joe Biden has imposed economic sanctions targeting Russian banks, oligarchs and technology, but has avoided directly hitting Russia’s energy sector. In part, that’s due to mounting political pressure at home as gas prices continue to surge.

Last week, Brent crude oil, which is produced in the North Sea, jumped above $100 per barrel in London for the first time since 2014. Global oil prices are now 40% higher than they were in early December.

It’s unclear how Shell and BP’s decisions will impact gas prices in the U.S.

Over the last two weeks, the average price of a gallon of regular-grade gasoline spiked 10 cents to $3.64 per gallon. That price is about a dollar higher than it was a year ago.

Nationwide, the highest average price for regular-grade gas is in the San Francisco Bay Area, at $4.86 per gallon. The lowest average is in Houston, at $3.14 per gallon.