Big oil’s toxic bind in Russia

7 September, 04:00 PM

On August 26, more than six months after Russia launched its full-scale invasion of Ukraine, the French oil giant TotalEnergies exited a Siberian gas field linked to the Russian military.

Total, which has been more reluctant than its rivals to commit to exiting fossil fuel production in Russia, announced it had sold its 49% stake in TerNefteGaz after days of mounting pressure. On August 24, a Global Witness investigation revealed the links between TerNefteGaz gas condensate and the Russian Air Force’s attacks on Ukrainian civilians flown by Sukhoi Su-34 bombers.

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This hastily arranged sale shines a light on the toxic bind consuming the oil majors active in the Russian fossil fuel industry. They have all, with great fanfare, announced their departures. Yet six months later they remain in Russia, complicit in the war and making huge profits from it.

Total’s rivals BP, ExxonMobil and Shell announced their intention to exit their own Russian assets back in February and March. Ever since, Total has often been referred to as the last oil major operating in Russia. Make no mistake, Total’s exit from TerNefteGaz is incomplete, highlighted by the fact that Total remains a 19.4% shareholder in Novatek, Russia’s second largest gas producer and the buyer of the remaining TerNefteGaz shares. Yet despite the company’s public stance, Total is to date the only Western oil major to have completed the sale of Russian fossil fuel assets. 

The Kremlin has tried to make it difficult, announcing that companies from ‘unfriendly countries’ have to obtain special exemptions in order to sell their stakes in Russian projects until at least the end of 2022. Oil majors have pointed to this as they scramble to find buyers. But finding suitors for these toxic assets, which are fuelling war crimes and climate breakdown, while entirely under the control of an authoritarian dictatorship, is proving difficult.


In June, Exxon said it was “engaged in transitioning” operations at the Sakhalin-1 oil project, its main asset in the country, to another company. But on August 30 Exxon said its exit has been blocked by the recent presidential decree and that the company would take legal action. Shell is likewise yet to find a buyer for its 27.5% stake in Sakhalin-2 project, and indeed may simply hand the asset over to the Russian state. And BP has been eerily quiet on the status of its sale of a 19.75% stake in Russian state oil giant Rosneft.

The clock is ticking. Total’s exit from TerNefteGaz should serve as yet another warning to ExxonMobil, Shell, BP, and to the whole fossil fuel industry. There can be no ethical production, trade, or profit from Russian fossil fuels. Can these companies guarantee their shareholders that they are not also fuelling the war, as well as financing it?

The majors are stuck in a toxic bind, unable or perhaps unwilling to extricate themselves from Russia’s war machine. Over the coming months, a grim spectacle is set to unfold, as their Russian joint ventures pay out their 2022 dividends – profits made during the war, blood money at the expense of Ukrainian lives. Shell has already received a $165m dividend from its own 27.5% stake in the Sakhalin-2 oil & gas joint venture for 2021 revenues.

Yet we will soon see which companies are willing to accept 2022 dividends, wartime profits made entirely since Russia’s brutal and illegal invasion of Ukraine. First up is Total, which will now have to decide what it will do with the dividend being offered by Novatek for the first half of 2022. As a near 20% shareholder of Novatek, the French company is owed well over $400m.

That this is a decision at all reflects the moral bankruptcy of the fossil fuel business. Clearly, these profits made from blood oil and gas at the expense of Ukrainian lives should be forgone. Governments must not leave this decision up to the oil giants. Any Russian fossil fuel dividend paid to a company for profits made after February 24 should be directed to Ukrainian reconstruction funds.

This is a headache of the majors’ own making. In their rush to profit from Russian fossil fuels, they left themselves stranded, toxic assets which are fuelling the war in Ukraine.

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