Major global oil companies including BP, Shell and TotalEnergies lost $44 billion in their exit from Russia, accounting for 40 percent of the total $110 billion losses recorded by different industries.
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.