Russia bans Western investors from selling banks and key energy stakes

Russia has banned investors from so-called hostile countries from selling shares in key energy projects and banks until the end of the year, ratcheting up pressure amid the sanctions standoff with the West.

Western countries and their allies, including Japan, have imposed financial restrictions on Russia since it sent troops to Ukraine in late February. Moscow retaliated with obstacles to Western companies and their allies leaving Russia and, in some cases, seized their assets.

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

Putin could issue a special waiver in certain cases for the deals to go through, according to the decree, and the government and central bank would have to prepare a list of banks for the Kremlin’s approval. The decree did not mention any investors by name.

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.

Russian state oil champion Rosneft on Thursday blamed Exxon Mobil for lower production at the Sakhalin-1 field group, after the US energy major said it was in the process of transferring its stake from 30% “to another party”.

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 and Mitsubishi Corp – one month to claim their stakes. in a new entity. which 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 exiting the Sakhalin-1 venture and exiting 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 for options to exit the project as the Japanese government reiterated its desire for Japanese companies to maintain their stakes.

Italians UniCredit and Intesa, US group Citi and Austrian Raiffeisen continue to look for options to leave Russia, while others like Societe Generale and HSBC have found a way out.

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

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

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