A Financial Times analysis found that the oil industry
suffered the greatest financial loss from the abrupt departure from Russia,
following its invasion of Ukraine in 2022. The next largest category of losses,
at over 15 percent, is utilities.
After leaving Russia, BP recorded a $24 billion impairment
cost on its Russian business the previous year. The oil company owned a small
portion of Rosneft.
Around 50 percent of BP’s total oil and gas reserves and a
third of its oil and gas production were represented by the 19.75 percent
interest.
Last year, Shell disclosed a $5 billion write-down on its
exit from Russia but claimed that this would not have an impact on its oil and
gas profits. They were among the first businesses to announce their intention
to leave Russia in the wake of the invasion of Ukraine.
On the other hand, TotalEnergies took a while to leave. The
French supermajor had a stake in a Novatek-led LNG project, but in late 2022
Total announced it would abandon it and leave, taking a $3.7 billion impairment
because it could not resell the project to Novatek due to Western sanctions
against Russia.
TotalEnergies announced earlier this year that it would
leave Russia with an impairment of about $4.1 billion, which would be recorded
in its first-quarter 2022 report.
The Arctic LNG 2 project by Novatek and the decrease in gas
reserves TotalEnergies had to book with its withdrawal were the main causes of
that impairment. TotalEnergies’ exit from Russia cost them a total of $14.8
billion, according to calculations by the FT.
However, these were merely the supermajors’ direct hits. The
losses were calculated by The Financial Times using their more recent financial
reports, so those impairment charges were just the beginning. Additionally, the
calculations excluded last year’s spike in oil and gas prices.
That increase undoubtedly helped the oil and gas industry,
somewhat softening the blow for BP, Shell, and TotalEnergies, but it also dealt
a blow to all other businesses that had already recorded billions of dollars in
losses due to their withdrawal from Russia.
Due to their significant exposure to the regional oil and
gas industry, BP, Shell, and Total booked the largest individual write downs on
their Russian operations when they left.
However, higher oil and gas prices more than offset those
impairments as the three companies reported combined profits of 95 billion
euros ($104 billion), or more than twice the $40 billion in impairment costs.