Russia Bans Western Investors From Selling Banking And Key Energy Holdings

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

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

MOSCOW, Aug. 5 (Reuters) – Russia has banned investors from so-called unfriendly countries from selling shares in key energy projects and banks until the end of the year, adding pressure to the sanctions deadlock with the West.

Western countries and allies, including Japan, have imposed financial restrictions on Russia since it sent troops to Ukraine in late February. Moscow retaliated with obstacles to Western companies and their allies leaving Russia, in some cases confiscating their assets.

The decree, signed by President Vladimir Putin and published Friday, immediately prohibits investors from countries that supported sanctions against Russia from selling their assets in production-sharing agreements (PSA), banks, strategic entities, companies producing energy equipment, as well as in other projects, from oil and gas extraction to coal and nickel.

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Putin could grant a special waiver in certain cases to allow the deals to go through, the decree said, and the government and the central bank would have to prepare a list of banks for Kremlin approval. The decree did not name investors.

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

On Thursday, Russian state oil champ Rosneft (ROSN.MM) blamed Exxon Mobil for falling production in the Sakhalin-1 group of fields after the US energy major said it was in the process of transferring its 30% share to another side. ” Read more

Separately, a government decree signed on August 2 gave foreign investors in the Sakhalin-2 liquefied natural gas (LNG) project – Royal Dutch Shell and Japanese trading houses Mitsui & Co (8031.T) and Mitsubishi Corp (8058.T) – one month to to claim interests in a new entity that will replace the existing project.

The new decree does not concern the Sakhalin-2 project, it said.

Exxon declined to comment. On Thursday, before the ban, Exxon said it has made significant progress in exiting the Sakhalin-1 venture and that the withdrawal is a complex process. As a former operator, Exxon has “an obligation to ensure the safety of people, the protection of the environment and the integrity of operations,” spokesman Casey Norton said on Thursday.

Shell looked for options to withdraw from the project, while the Japanese government reiterated its wish that the Japanese companies retain their interests there.

Italy’s UniCredit (CRDI.MI) and Intesa (ISP.MI), US group Citi and Austria’s Raiffeisen (RBIV.VI) continue to look for options to leave Russia, while others, such as Societe Generale (SOGN.PA), (ROSB.MM) and HSBC have found a way out. read more

Citigroup declined to comment Friday, but on Thursday the bank said in a filing that it will continue to reduce its operations and exposures to Russia.

Citigroup has stopped recruiting new businesses or new customers in Russia, it said.

Citigroup disclosed $8.4 billion to Russia as of June 30, compared to $7.9 billion at the end of the first quarter. Exposure increased due to an increase in the ruble value. read more

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

Our Standards: The Thomson Reuters Trust Principles.

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