Russia bans Western investors from selling banking, a key stake in the energy sector

Russian President Vladimir Putin chairs the meeting on the development of the country’s metallurgical sector via a video link in the Kremlin in Moscow on August 1, 2022 Sputnik / Pavel Byrkin / Kremlin via REUTERS

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  • This content was produced in Russia, where the law restricts the reach of Russian military operations in Ukraine

MOSCOW, August 5 (Reuters) – Russia has banned investors from so-called hostile countries from selling stakes in key energy projects and banks by the end of the year, increasing pressure on the sanctions dispute with the West.

Western countries and allies, including Japan, have imposed financial restrictions on Russia since it dispatched troops to Ukraine in late February. Moscow responded with obstacles for Western companies and their allies leaving Russia, and in some cases took over their assets.

Signed by President Vladimir Putin and released on Friday, the decree immediately prohibits investors from countries supporting sanctions against Russia from selling assets under production sharing agreements (PSAs), banks, strategic entities, energy equipment companies and other projects ranging from oil and gas extraction to carbon and nickel.

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According to the decree, Putin may issue a special waiver in some cases so that the deals continue, and the government and the central bank should prepare a list of banks for approval by the Kremlin. The decree did not mention investors by name and surname.

RECEIVING THE HIT

The ban covers almost all major financial and energy projects in which foreign investors still have shares, including the Sakhalin-1 oil and gas project.

Russian national oil champion Rosneft (ROSN.MM) accused Exxon Mobil of slowing production on the Sakhalin-1 oil group on Thursday after the US energy major said it was in the process of transferring its 30% stake “to another party”. ” Read more

Separately, a government decree signed on August 2 gave foreign investors the Sakhalin-2 liquefied natural gas (LNG) project – Royal Dutch Shell and Japanese department stores Mitsui & Co (8031.T) and Mitsubishi Corp (8058.T) – a month to take over shares in the new an entity that will replace the current project.

The new decree does not include the Sakhalin-2 project.

Exxon declined to comment. On Thursday, ahead of the ban, Exxon said it had made significant progress in exiting the Sakhalin-1 project and that the recall was a complex process. As a former operator, Exxon has “a responsibility to ensure human safety, environmental protection and the integrity of operations,” spokeswoman Casey Norton said on Thursday.

Shell looked for an option to withdraw from the project, while the Japanese government reiterated its wish that Japanese companies would keep their shares there.

Italian UniCredit (CRDI.MI) and Intesa (ISP.MI), the US Citi group and Austrian Raiffeisen (RBIV.VI) are still looking for an exit option from Russia, while others such as Societe Generale (SOGN.PA), (ROSB. MM) and HSBC found a way out. read more

Citigroup declined to comment on Friday, but the bank said in a motion on Thursday that it would continue to limit its operations and exposure to Russia.

Citigroup stopped acquiring new companies or new customers in Russia.

Citigroup disclosed $ 8.4 billion of exposure in Russia as of June 30, compared with $ 7.9 billion at the end of the first quarter. The exposure increased as a result of the increase in the value of the ruble. read more

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Reporting by Reuters; Editing by Mark Potter, Frank Jack Daniel and David Evans

Our Standards: The Thomson Reuters Trust Principles.

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