Russia bars Western investors from selling key banking and energy holdings

Russian President Vladimir Putin chairs a meeting on the development of the country’s metallurgical sector, via video link, at the Kremlin in Moscow, Russia, on August 1, 2022. Sputnik/Pavel Byrkin/Kremlin via REUTERS

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  • This content was produced in Russia, where coverage of Russian military operations in Ukraine is restricted by law.

MOSCOW, Aug 5 (Reuters) – Russia has barred investors from so-called hostile countries from selling shares in energy projects and key banks until the end of the year, mounting pressure in the sanctions showdown with the West.

Western countries and their allies, including Japan, have piled financial restrictions on Russia since it sent troops to Ukraine in late February. Moscow retaliated by blocking Western companies and their allies from leaving Russia and, in some cases, seizing their assets.

The decree, signed by President Vladimir Putin and published on Friday, immediately prohibits investors from countries that supported sanctions on Russia from selling their assets in production-sharing agreements (PSAs), banks, strategic entities, energy equipment producing companies, as well as in other projects, from oil and gas production to coal and nickel.

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Putin could issue a special waiver in certain cases for the deals to go ahead, the decree said, and the government and the central bank should prepare a list of banks for the Kremlin’s approval. The decree does not mention investors by name.

TAKING THE HIT

The ban covers almost all major financial and energy projects in which foreign investors still have stakes, including the Sakhalin-1 oil and gas project.

On Thursday, Russian state oil leader Rosneft (ROSN.MM) blamed Exxon Mobil for falling production at the Sakhalin-1 group of fields, after the US energy giant said it was in the process of transferring its stake from the 30% “elsewhere”. ” Read more

Separately, a government decree signed on August 2 gave foreign investors in the Sakhalin-2 liquefied natural gas (LNG) project – Royal Dutch Shell and Japanese trading houses Mitsui & Co (8031.T) and Mitsubishi Corp (8058.T) – one month to claim your shares in a new entity that will replace the existing project.

The new decree does not cover the Sakhalin-2 project, he said.

Exxon declined to comment. On Thursday, before the ban, Exxon said it had made significant progress in pulling out of the Sakhalin-1 venture and that withdrawal is a complex process. As a former operator, Exxon has “an obligation to ensure the safety of people, the protection of the environment and the integrity of operations,” spokesman Casey Norton said Thursday.

Shell was looking at options to withdraw from the project while Japan’s government reiterated its desire for Japanese companies to retain their stakes there.

The Italian UniCredit (CRDI.MI) and Intesa (ISP.MI), the US group Citi and the Austrian Raiffeisen (RBIV.VI) are still looking for options to exit Russia, while others such as Societe Generale (SOGN.PA), ( ROSB.MM) and HSBC have found a way out. read more

Citigroup declined to comment on Friday, but on Thursday the bank said in a filing that it will continue to reduce its operations and exposures to Russia.

Citigroup has stopped soliciting new business or new clients in Russia, he said.

Citigroup disclosed $8.4 billion in exposure to Russia as of June 30, compared to $7.9 billion at the end of the first quarter. The exposure increased due to an increase in the value of the ruble. read more

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Information from Reuters; Edited by Mark Potter, Frank Jack Daniel and David Evans

Our standards: the Thomson Reuters Trust Principles.

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