Energy assets affected due to sanctions and standoff between Russia and the West

On Tuesday, the United States and Russia reached separate agreements to stop attacks on energy and maritime targets. Washington also agreed to press for the lifting of some sanctions against Moscow.

In the event that a peace agreement is reached between Russia and Ukraine, the potential for a relaxation of U.S. sanctions and EU sanctions has led to the question of what will happen to the disputed assets which were affected by international sanctions. This includes both Russian assets located in Europe as well as assets owned by foreign companies in Russia.

The main source of revenue for Moscow is oil and gas exports. After the Russian invasion of Ukraine in 2022 international sanctions became more severe. Washington announced its most harsh round on January 10, 2019.

Western companies either sold or ceded their energy assets to Russian companies, and European governments took over the units of Russian energy companies. Meanwhile, Moscow has taken measures in retaliation against Western companies that have units in Russia.

Here's a list of some of those energy assets and companies that were affected:

SAKHALIN 1 OIL AND GAS RESOURCES PROJECT

Exxon Mobil Corp owned a 30% stake as operator in Sakhalin-1. This project is to develop oil and natural gas off the coasts of Sakhalin Island. Rosneft of Russia, ONGC Videsh in India and SODECO from Japan were all partners. Exxon wrote off $4.6 billion in 2022 for abandoning Sakhalin-1.

In December 2024 President Vladimir Putin issued a decree that extended the period of sale for the Exxon share in the Sakhalin-1 project oil and gas until January 1, 2026.

SAKHALIN-2 OIL, GAS, AND LNG PROJECT

According to an order from the government, Gazprom, a Kremlin energy giant, will acquire a 27.5% share in Sakhalin Energy, a Russian LNG producer, for $1 billion in 2024.

A Russian prosecutor has filed a claim for unpaid gas deliveries to Shell in 2022. Shell is being asked to pay Gazprom 1,5 billion euros. A new court hearing will be held next month.

Gazprom owns 77.5% or more of Sakhalin Energy located at the southernmost tip of Sakhalin, an island in the Pacific Ocean. Mitsui 801.T (12.5%), and Mitsubishi (10%) are also shareholders.

SALYM OIL RESOURCES PROJECT

Shell has agreed to sell its half of Salym to Gazprom in 2023. Shell already wrote down its stake in the project by $233 million.

Shell sold its Russian retail business and lubricants to Lukoil by 2022.

WESTERN COMPANIES ARE IN RUSSIA

UNIPER

In April 2023, the Kremlin put under its control Unipro, a Russian division of German utility Uniper that has five power stations in Russia.

FORTUM

The same action has been taken against Fortum's Russian division, which owned seven thermal power stations in the Ural and Western Siberia regions, as well as a portfolio in Russia of wind and solar projects with local partners.

At the end of 2022, their book value was 1,7 billion euros ($1,87 billion).

BP controls a formal 19.75% stake of Rosneft. Igor Sechin, the head of Rosneft in October 2022, said that BP remained a Shadow shareholder in Rosneft despite the statements made by the international giant about leaving Russia. In November 2024, BP's CEO Murray Auchinclos stated that the company was still trying to sell its Rosneft stake.

Trafigura Vitol Mercantile, the global commodity traders, joined Rosneft’s flagship project, Vostok Oil, in 2020-2021. The project is expected to produce 2 million barrels of oil per day by 2030. However, they left after February 2022.

WINTERSHALL DEAL

According to Russian decrees, from December 2023 onwards, Wintershall Dea’s stakes in Yuzhno-Russkoye, the oil and gas condensate project, and the Achimov Gas Project will be transferred to newly-created Russian firms and sold to Gazovyye Techhnologii. This formalises the loss of control which BASF and Wintershall Dea have flagged since January 20, 2023.

Putin also ordered that OMV stakes will be transferred to Russian ventures by December 2023.

OMV paid 1,75 billion euros in 2017 for a stake of the Yuzhno-Russkoye field, which is one of the largest oil fields in Russia. At the time, it said that the oil field could increase its production by 100,000 barrels equivalent per day (boe).

RUSSIAN COMPANIES OUTSIDE THE WEST

GAZPROM

After Gazprom left the subsidiary without explanation, Germany nationalised Gazprom Germany in 2022.

Sefe was renamed (Securing Energy for Europe) and the German government invested 6.3 billion euro ($6.92billion) in its recapitalisation with approval from the European Commission.

ROSNEFT

Germany's energy regulator will put two German divisions owned by Rosneft – Rosneft Germany GmbH and RN Refining & Marketing GmbH – under a so-called trusteeship 2022.

Germany acquired Rosneft stakes in three oil refining companies: 54.17% in PCK Schwedt; 24% in MiRO; and 28.57% in Bayernoil.

Rosneft is the legal owner of these assets, but cannot exercise any control as long as there is a trusteeship in place.

LUKOIL

Lukoil plans to raise $2 billion by selling its Burgas refinery in Bulgaria. Nina Chestney, Gareth Jones and Nina Chestney are responsible for reporting; they also edit the article.

(source: Reuters)