Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Exclusive-How Norway's Equinor exited Russia: Move fast, sell cheap

Stock Markets Sep 14, 2022 01:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Norwegian energy company Equinor's flag is seen at its headquarters in Stavanger, Norway, December 5, 2019. REUTERS/Ints Kalnins/File Photo
 
RDSa
-0.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XOM
-0.35%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BP
+0.83%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Nerijus Adomaitis and Ron Bousso

LONDON/OSLO (Reuters) - Norway's Equinor became the first Western oil major to fully exit Russia this month, avoiding the high-profile clashes with Moscow experienced by some rivals - but it also paid a price.

According to three industry sources, Russia's Rosneft paid just one euro ($1) for Equinor's main assets, while also allowing the state-controlled Norwegian group to forgo future liabilities and investment commitments.

Details of the deal, which came as scores of Western businesses pulled out of Russia following its invasion of Ukraine, have not previously been reported.

The deal followed weeks of negotiations between Equinor and Rosneft's representatives, who in turn handled relations with the Kremlin, which holds the final say on such transactions.

Under the deal, the Kremlin agreed to transfer Equinor's future investment liabilities and commitments, valued at around $1 billion, to Rosneft. In return, Equinor agreed to sell Rosneft its stakes in their joint ventures for one euro, the sources said, speaking on condition of anonymity.

A spokesperson for Equinor, which wrote down the book value of its Russian assets to zero from $1.1 billion in the first quarter of this year, said its exit from the joint ventures with Rosneft was "value neutral".

Rosneft did not respond to repeated requests for comment.

The withdrawal brought an end to ambitious plans by Equinor, which 10 years ago signed a deal with Rosneft to help explore for oil and gas across huge swathes of Russia's territory, including the Arctic, Pacific and the country's south.

It also came as U.S. oil major Exxon Mobil (NYSE:XOM) suspended production at the Sakhalin-1 oil project in Russia's Far East, angering Moscow and triggering a new law banning assets sales by foreign companies without the Kremlin's approval.

Rivals Shell (LON:RDSa) and BP (NYSE:BP) have also made little progress in exiting Russia or finding buyers for tens of billions of assets.

AMBITIONS PLANS

Equinor signed a strategic cooperation agreement with Rosneft in May 2012 in the presence of Russia's President Vladimir Putin and then Russian deputy prime minister Igor Sechin, who joined Rosneft as its head shortly after.

The deal included jointly drilling wells offshore Russia and studying production potential for some onshore assets, as well as Rosneft's participation in exploration off Norway.

It was meant to bring cooperation between Norway and Russia to a new level after the two Arctic powers finally agreed their border in the Barents Sea in 2010, ending a 40-year dispute.

Western sanctions imposed on Moscow after Russia's annexation of Ukraine's Crimea peninsula in 2014 restricted cooperation in drilling offshore Arctic wells, but onshore it continued and even expanded.

Between 2018 and 2020, Equinor and Rosneft expanded their partnership to several fields in west and east Siberia.

According to two sources, several years ago Equinor was working on an even bigger, multibillion-dollar agreement with Rosneft to jointly explore gigantic Siberian fields, but the two couldn't agree on the final terms.

In 2021, Equinor reported net proven petroleum reserves in Russia of 88 million barrels of oil equivalent (boe) and production of 21,000 boe per day, just 1% of its global output and a fraction of Shell or BP's much larger Russian output.

On Feb. 27, three days after Russia invaded Ukraine, Equinor announced the start of its exit from Russia.

It set up a group to execute the withdrawal and maintained dialogue with authorities to make sure it complied with all sanctions, the Equinor spokesperson said.

The details were finalised in May.

Equinor completed its full withdrawal this month by transferring its 30% stake in the Arctic Kharyaga oilfield to state-controlled Russian operator Zarubezhneft. Financial terms were not disclosed.

Exclusive-How Norway's Equinor exited Russia: Move fast, sell cheap
 

Related Articles

Airbus may delay some 2023 jet deliveries: sources
Airbus may delay some 2023 jet deliveries: sources By Reuters - Nov 27, 2022

By Tim Hepher PARIS (Reuters) - Airbus is preparing the ground for further delays to planned delivery dates of some medium-haul aircraft in 2023 even as it races to meet delivery...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email