What financial impairments does Shell anticipate from its Russian divestments?

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Shell anticipates significant financial impairments from its decision to exit Russian joint ventures.

Shell has announced its intention to withdraw from all its operations in Russia, a move that is expected to result in substantial financial write-downs. At the close of 2021, the company held approximately US$3 billion in non-current assets tied to these Russian ventures. These joint operations, specifically the Salym Petroleum Development and Sakhalin 2 projects, were notable contributors to Shell's financial performance, collectively generating $700 million in net earnings in 2021.
Exit from Key Russian Projects

The company's withdrawal encompasses its stake in the Sakhalin 2 liquefied natural gas (LNG) facility, a significant undertaking located off Russia's northeastern coast. This project alone accounts for a substantial portion of Russia's LNG exports, producing around 11.5 million tonnes annually. Shell is also divesting from the Salym Petroleum Development, another joint venture with Gazprom.
Financial Impact of Divestments

The decision to exit these Russian joint ventures is directly linked to anticipated impairments. Shell reported that its non-current assets within these ventures in Russia amounted to roughly US$3 billion at the end of the 2021 fiscal year. This figure underscores the scale of the financial exposure that Shell is now addressing through its divestment strategy.
Contribution to Earnings

In the preceding year, 2021, the combined contributions of the Salym and Sakhalin 2 projects to Shell's net earnings were substantial, totalling $700 million. This highlights the economic significance of these Russian operations for the energy giant prior to the decision to divest.
Broader Industry Trend

Shell's decision to exit Russia aligns with a broader trend among major Western energy companies. Following similar announcements from rivals such as BP and Norway's Equinor, Shell's move signifies a significant shift in international energy sector engagement with Russia amid ongoing geopolitical developments.

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What financial impairments does Shell anticipate from its Russian divestments?

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