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Oil Major Shell to Write Off up to $5bn in Assets after Exiting Russia
By Derrick Bangura
Shell has announced that it will write off between $4 and $5 billion in the value of its assets after pulling out of Russia following the country’s unprecedented invasion of Ukraine.
Thursday’s announcement offers a first glimpse at the potential financial impact to Western oil majors of exiting Russia.
“For the first quarter 2022 results, the post-tax impact from impairment of non-current assets and additional charges (e.g. write-downs of receivable, expected credit losses, and onerous contracts) relating to Russia activities are expected to be $4 to $5 billion,” Shell said in a statement Thursday.
“These charges are expected to be identified and therefore will not impact Adjusted Earnings.”
Shell had previously estimated that Russia write-downs would reach $3.4 billion.
Further details of the impact of ongoing developments in Ukraine will be set out in Shell’s first-quarter earnings report on May 5, the company said.
Shell was forced to apologize on March 8 for buying a heavily discounted consignment of Russian oil two weeks after Russia’s invasion. It subsequently announced that it was withdrawing from its involvement in all Russian hydrocarbons.
The company said it would no longer purchase Russian crude oil and would shut its service stations, aviation fuels and lubricants operations in Russia. The company had already vowed to exit its joint ventures with Russian gas giant Gazprom and its related entities.
In Thursday’s update, Shell also said its cashflow is expected to be hit by “very significant working capital outflows as price increases impacting inventory have led to a cash outflow of around $7 billion.”
Divestment ‘outweighs reputational damage’
Shell’s share price fell 1.8% in early trade, along with that of fellow oil giant BP.
“Despite the eye watering costs, the share price should continue to stay reasonably resilient given the divestment far outweighs the reputational damage which could be caused had it not pulled out,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Russ Mould, investment director at British digital stockbroker AJ Bell, said the modest fall for Shell “reflects the fact that the company is also pointing to a big benefit from surging energy prices.”
He added that BP’s fall came “likely on a read-across as investors looked at what it might imply for its much larger Russian footprint.”
Shortly after Russia invaded Ukraine, BP announced that it would offload its 19.75% stake in Russian state-controlled oil company Rosneft, after 30 years of operations in the country.
Western oil companies have faced pressure from shareholders and governments to sever ties with Russia, but TotalEnergies CEO Patrick Pouyanne told CNBC in late March that the French company would not write off its assets in Russia as it would effectively mean giving them to Putin “for free.”
President Bola Tinubu, on Tuesday arrived in Katsina to receive the remains of the former President Muhammadu Buhari, who passed away in London on Sunday at the age of 82.
Just hours before the burial of former President Muhammadu Buhari, heartfelt tributes have continued to pour in from beneficiaries of his many charitable deeds, with many describing him as a man who never turned his back on the needy.
Speaking to the News Agency of Nigeria (NAN) on Tuesday, Aminu Daura, a respected community elder, recalled how Buhari consistently provided foodstuffs during Ramadan for families, friends, widows, and orphans in his hometown.
“He never made noise about it, but many homes had food on their tables during fasting period because of him,” Daura said.
Abdullahi Sani, a physically-challenged man who received a tricycle from the Buhari Foundation in 2021, was overcome with emotion while speaking to NAN.
“I can move around and feed my family today because of Baba Buhari. I pray to Allah to reward him for giving hope to people like me,” he said, in tears.
Hajiya Fatima Yahaya, another resident, remembered Buhari’s acts of kindness during festive seasons.
“Even after he left office, his aides ensured that the usual support still reached us every year. He always remember his people,” she said, referring to his distribution of Sallah rams and food items to indigent families during Eid celebrations.
Other residents of Daura also shared memories of how the late former president quietly paid school fees and medical bills for struggling families, actions rarely publicized.
“Some of us benefited from his silent interventions. He was a true father and a great figure in the society,” said Ali Saidu.
On Monday night, Imams across various mosques in Daura held special Qur’anic recitations, praying for the forgiveness of Buhari’s sins and his eternal peace.
The Chief Imam of Daura Central Mosque, Sheikh Musa Kofar Barau, described Buhari as a humble leader whose legacy of service and compassion would remain alive in the hearts of the people.
Buhari is scheduled to be buried later on Tuesday in his hometown of Daura, Katsina State, in line with Islamic rites. The community is bracing to welcome thousands of mourners from across Nigeria and beyond.
His Majesty King Mohammed VI of Morocco has extended heartfelt condolences to President Bola Tinubu, the family of the late former President Muhammadu Buhari, and the entire Nigerian people following Buhari’s death.
In a message of sympathy, the Moroccan monarch described the passing of the former Nigerian leader as a “sad occurrence,” expressing deep sorrow over the loss.
King Mohammed VI hailed Buhari as “an illustrious leader who worked untiringly to serve his country’s best interests and lead his people toward further progress and prosperity.”
He added: “Our thoughts and prayers are with you and the bereaved. I share your grief and want you to know how much I appreciated the working sessions I had with the deceased.”
Reflecting on their bilateral engagements, the king noted that his collaboration with Buhari led to the launch of promising development projects, “ushering a new era grounded in friendship and close cooperation between our two sister nations.”
Tinubu arrives Katsina to receive Buhari’s body for burial
“He Never Turned His Back on the Needy” — Tributes Pour In Ahead of Buhari’s Burial
King Mohammed VI Mourns Buhari, Praises Legacy of Nigeria’s Former Leader
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