SHEL, BP Stocks Dip as Oil Producers Dump Russian Stakes: 7 Things to Know

Shares of Shell (NYSE:SHEL) and BP (NYSE:BP) stocks are both in the red today after it was announced that the companies would divest their Russian investments for a massive loss. Over the weekend, BP announced it would divest its stake in Rosneft (OTCMKTS:OJSCY), a Russian energy company. Likewise, Shell announced it would be ending its partnership with Gazprom (OTCMKTS:OGZPY), which could potentially lead to “impairments on about $3 billion of assets.”

An oil pump with the Russian flag in the background.
Source: Anton Watman /

However, it was also reported that the Russian central bank had ordered a ban on foreign clients from selling Russian securities. The ban will be effective until the “cancellation” of the order. Whether this ban will affect Shell and BP divestments is still unclear.

BP currently owns a 19.75% stake in Rosneft that is valued at approximately $14 billion. A divestment from Rosneft could potentially cost the company as much as $25 billion. Currently, Rosneft accounts for “around half of BP’s oil and gas reserves and a third of its production.”

Meanwhile, flipping back to Shell, the oil giant also announced plans to dump its 27.5% stake in the Sakhalin-2 liquefied natural gas (LNG)  plant. The plant is 50% owned and operated by Gazprom. Shell CEO Ben van Beurden had the following to say:

“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 […] Our decision to exit is one we take with conviction.”

So, what else should you know about the geopolitical events concerning oil stocks like BP and Shell? Let’s jump right in.

SHEL, BP Stocks: 7 Things to Know in Light of the Russia-Ukraine Conflict

  1. Shell has announced that it plans to sell stakes in other Russian exploration projects as well.
  2. In addition, Shell disclosed that its Russian withdrawal will “not affect its plans to switch to low-carbon and renewables energy.”
  3. BP did not provide specific details on how exactly it would divest its Rosneft stake.
  4. Analyst Susannah Streeter says it will be “highly difficult” for BP to recover the full value of its Rosneft investment.
  5. Additional oil giants may choose to divest their Russian interests in the following weeks.
  6. Exxon Mobil (NYSE:XOM) has been involved with Russian oil for over 25 years. The company has a 30% stake in Sakhalin-1, an offshore oil project.
  7. Over the weekend, petroleum producer Equinor (NYSE:EQNR) also announced that it will start exiting its Russian ventures.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC