Shell writes off $3.9 bln in losses from Russia exit; $1.6 bln from Sakhalin-2, $1.1 bln from Nord Stream 2

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Shell writes off $3.9 bln in losses from Russia exit; $1.6 bln from Sakhalin-2, $1.1 bln from Nord Stream 2

MOSCOW. May 5 (Interfax) - Anglo-Dutch Shell (SPB: RDS.A) has recognized a $3.9 billion after-tax loss associated with its withdrawal from Russian assets, the company said in its Q1 2022 reporting.

Earlier the company said that its losses could amount to $4-5 billion.

In particular, write-offs from the stake in the Sakhalin-2 project (in the share of profit of joint ventures) are estimated at $1.6 billion, while another $1.126 billion are costs from write-offs related to lending for the Nord Stream 2 project (in the interest and other expenses/income item), $858 million - write-offs for joint ventures in Russia and marketing assets (including depreciation and amortization - Salym project, Gydan and marketing non-current assets and assets in the form of right-of-use).

Also included is a $35 million loss in revenue due to market adjustments and $219 million in sales and administrative expenses.

"In relation to the assets for which the above charges are recognised in the first quarter 2022, the remaining balance sheet carrying amount as at March 31, 2022 is some $1 billion in total," Shell said.

Shell has a 27.5% interest in Sakhalin-2, an integrated oil and gas project located on Sakhalin island, Russia. Up to March 31, 2022 this investment was accounted for as an associate applying the equity method. Following the announcements the recoverable amount of the investment was estimated as the risk-adjusted dividends declared on Sakhalin's 2021 results, of which the first part was received in April 2022. This resulted in recognition of an impairment charge of $1.614 billion.

"Significant influence over the Sakhalin-2 investment has been lost from April 1, 2022 with the resignation of Shell's executive directors and withdrawal of managerial and technical staff, leading to recognition, without financial impact, of the investment as a financial asset accounted for at fair value from that date," the company said in its reporting.