Largest foreign oil and gas companies recorded almost $58 billion in asset impairment losses in Russia in 2022
MOSCOW. March 6 (Interfax) - The largest foreign oil and gas companies in 2022 wrote off about $58 billion from their balance sheets related to projects in Russia, Interfax calculated based on data from company reports.
British BP plc , as one of the largest shareholders of Rosneft , recorded the largest loss, $25.52 billion, writing off investments in the Russian company and its joint ventures with it, namely Kharampurneftegaz, Ermak Neftegaz and Taas-Yuryakh Neftegazodobycha. BP still owns these assets. In December, the company announced it was continuing to look for a buyer for its stake in Rosneft and was actively marketing the asset. At the same time, the process of exiting assets is complicated and delayed due to international sanctions against Russia and Russian regulations.
France's TotalEnergies was second in loss-making, writing off $14.8bn. The company's losses associated with its Russian assets increased throughout the year. In Q1, the company wrote off $4.095 billion mainly on investments related to the Arctic LNG 2 project, and in Q2, $3.513 billion due to the negative impact of international sanctions on the value of its stake in Novatek ; In Q3, the company recognized an impairment to its profit from Russian assets of $3.056 billion, and in Q4, it wrote off $4.1 billion due to the deconsolidation of its stake in Novatek.
Wintershall Dea AG took third place in terms of write-offs due to withdrawal from Russian assets, with a cost of 4.5 billion euros. Initially, the company had intended to continue with its existing projects for developing the Achimov deposits of the Urengoy oil and gas condensate field, or Achimgaz, and the production of natural gas at the Yuzhno-Russkoye field as part of Severneftegazprom, but considered it inappropriate after a number of decisions by the Russian authorities that "annulled" the previously existing economic joint venture model with Gazprom . In all, along with other write-offs in the gas transportation segment, Wintershall Dea's Russia-related losses in 2022 reached 7 billion euros.
Due to losses from Wintershall Dea, Germany's BASF, its main shareholder, had to recognize an impairment in the value of its shares in its subsidiary of 6.531 billion euros.
Another partner of Gazprom in the joint venture, Austrian OMV, recognized a 2.5 billion euro impairment of assets for losses from the deconsolidation of the operating company of the Yuzhno-Russkoye gas field belonging to Severneftegazprom and the Gazprom Yurgm Development Trading Company, OMV head Alfred Stern said. The rest of the write-off amount, 432 million euros is related to other operating expenses. In general, the company is cautious about its plans for its Russian assets. Despite the fact that the changed conditions call into question the expediency of participating in the JV, the decision to sell the assets has not yet been made. The capacity of the Austrian shareholder "is limited by Russian laws, and there can be no talk of any transaction now," OMV CFO Reinhard Florey said during the JV's final press conference.
Anglo-Dutch Shell (SPB: RDS.A) posted a total net loss of $4.186 billion from the write-down of its Russian assets. This figure includes impairments for the Sakhalin-2, Salym Petroleum Development and Gydan Energy projects, the latter two being former Joint Ventures with Gazprom Neft . They also include write-offs on loans for the construction of Nord Stream 2, as well as losses associated with the forced sale of Shell Oil's marketing assets to Lukoil . Theoretically, in upcoming periods, Shell may reflect income from the Salym and Sakhalin projects, since the transfer of Salym Petroleum assets to Gazprom Neft "is positioned as a sale, and monetary compensation is due for the unclaimed share in Sakhalin-2 minus the amount of damage caused by the actions of the foreign participant.
ExxonMobil is the only oil and gas company whose losses from Russian assets did not increase by the end of the year. In Q1, the corporation announced a write-off under the Sakhalin-1 Production Sharing Agreement project of $3.4 billion. At year-end, it was revised to $2.3 billion. At the same time, the Russian side must evaluate the value of an unclaimed share in the PSA and accrue appropriate compensation for Exxon to a special type "C" account, minus the amount of damage caused by the actions of the foreign company. Specifically, among these deductions may be the tax debt of Exxon Neftegas Ltd. of 15.5 billion rubles, the decision on whose recovery was made by the Yuzhno-Sakhalinsk city court in February. The possibility exists that the fact of the complete shutdown of production, a decision made by Exxon Neftegas, will be included in Russia's financial claims against the company.
Norway's Equinor posted a Q1 net loss on asset write-offs in Russia of $1.08 billion of which $251 million relates to fixed assets and intangible assets and $832 million to investments accounted for using the equity method. The company has not changed its estimate. The company left the Russian market relatively quietly, transferring its shares in joint ventures and PSA to its Russian partners. Angara Oil and SevKomNeftegaz were consolidated by Rosneft, and Zarubezhneft received a share in the Kharyaga PSA Company
Company Official Write-Off Amount Assets, shares BP $25.52 bln Rosneft (19.75%) Kharampurneftegaz LLC (49%), Yermak Neftegaz LLC (49%) Taas-Yuryakh Neftegazodobycha LLC (20%) TotalEnergies $14.8 bln Arctic LNG-2 Novatek (19.4%) Wintershall Dea 7 bln euros (about $7.5 bln on Dec 31, 2022) Severneftegazprom LLC (35%) Achimgaz LLC (25.01%) Nord Stream, Nord Stream 2 Shell $4.18 bln Sakhalin Energy - PSA Sakhalin-2 (27.5%) Salym Petroleum Development (50%) Shell Oil (Over 400 gas stations in Russia, oil lubricants factory), Nord Stream 2 OMV 2.5 bln euros (about $2.6 bln on Dec. 31, 2022) Severneftegazprom LLC (24.99%) Gazprom Yurgm Development (1 preferred share, with right to receive 99.9% of net profit), Nord Stream 2 Exxon $2.3 bln Exxon Neftegas Ltd. - Sakhalin-1 PSA (30%) Equinor $1.08 bln Kharyaga PSA (30%), Angara Oil (49%) SevKomNeftegaz (33.33%)