The big oil companies accuse a blow of 40,000 million after leaving Russia

The broad profits achieved by the oil companies during the first months of 2022 have been overshadowed by the impact of sanctions against Russia. The big Western companies have seconded the veto on the Russian economy and have decided to leave their market, both in terms of sales and production. As a consequence, the blow to the largest companies in the sector amounts to 40,170 million dollars (almost 38,000 million euros) altogether, with the English BP in the lead. However, these losses have been offset by the high price of oil, which has triggered their income in the first quarter and allows them to maintain profits.

BP is by far the company most affected by the exit from Russia and reported in its quarterly results a pre-tax accounting charge of $25.52 billion after disposing of his stake in Rosneft and other businesses. In the Russian oil company BP controlled almost 20% of the capital, which contributed a third of BP’s oil and gas production in 2021, and its loss includes a amortization of 13,500 million. This charge dragged the company into losses in the first quarter of the year, after the record profit in almost a decade in 2021 and even despite the high prices of raw materials. BP’s operating profit beat analysts’ expectations and its revenue grew more than 40% from a year ago.

BP’s losses stand out from the positive trend of its rivals who, despite the Russian impact, have increased profits compared to a year ago. the french Total Energies It is the second that has suffered the greatest blow due to its exposure to Russia. Specifically, he recorded a $4.1 billion impairment by the “uncertainty” to carry out a liquefied natural gas (LNG) project, Arctic LNG 2located in the Russian Arctic and in which the Russian Novatek. Total decided not to contribute more capital for the development of projects in Russia and has begun the gradual suspension of its activities in the country. Despite this, its sales until March rose 65% compared to 2021 and it earned almost 5,000 million dollars (+48%).

For its part, Shell had warned that its exit from Russia could cost between 4,000 and 5,000 million dollars, the final impact was lowered to 3,900 million as notified in its presentation of results. Its exposure to Russia is mainly due to its participation (27.5%) in the liquefied natural gas project Sakhalin-2 with Gazprom. Even so, until March it raised its benefit almost 26%. In the case of Exxon Mobil, he revealed that the cost of its withdrawal from Russian activities amounted to $3.4 billion compared to a turnover of 90,500 million (+53%). the austrian OMV and the norwegian equinor they have also announced a loss of 2,170 and 1,080 million dollars, respectively, in their accounts.

Other companies in the sector have not recorded an impact on their accounts because they had no activity in Russia. However, the exposure to the market is also reflected by the purchases they make in the country and that have not yet been completely reduced. According to a report from Center for Research on Energy and Clean Air (CREA), Russia has earned 63,000 million euros from the sale of fossil fuels since it invaded Ukraine. The majority (71%) was acquired from Europe and, among others, names the oil companies Exxon Mobil, Shell, Total, Repsol, BP or the Finnish Neste among those who have received deliveries.

Despite the exposure to the Russian market, not all the consequences of the sanctions are negative for the oil companies. Its profits have skyrocketed in recent months driven by the price of raw materials, specifically oil. The veto on Russian crude, already imposed by the US and the United Kingdom and which the European Union is debating, further restricts supply at a time of clear imbalance after demand recovered after the reopening of the economies.

Russia is one of the main oil producers and the veto against it has sent prices soaring. The price of a barrel Brent set a record since 2014 in March after reaching $130. Despite moderating since then, it is still trading above $110 and its price has risen 44% since January. The WTI barrel, the reference in the US market, also exceeds 110 dollars.

Investors have not remained oblivious to this trend that boosts the income of companies in the sector and their prices have advanced positively in the year, with increases of up to 40% since January for Exxon or Chevron, in the face of the sharp falls recorded by the main world indices. The selective Euro STOXX Oil & Gas adds 11.4% since the beginning of the year, while the Euro STOXX 50 loses 15%.

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