Leave Russia or stay? Foreign companies have no choice

The departure of the British oil giant BP from Russia is an exception among the foreign groups present in the country, which can hardly repatriate factories or supermarkets overnight.

On Sunday, on the fourth day of the Russian invasion of Ukraine, the main British oil company announced that it was leaving the Russian giant Rosneft, in which it owns a 19.75% stake, after denouncing “an act of aggression that has tragic consequences in the region”.

Norway’s sole energy giant Equinor announced on Monday that it was ceasing its investments in Russia and pulling out of joint ventures in the country. Equinor is 67% controlled by the Norwegian state, whose sovereign wealth funds will freeze their investments in Russia.

“It is very difficult for any company that has an activity in Russia to leave now”, says Guntram Wolff, director of the Bruegel think tank in Brussels.

“Firstly because the Russian central bank prohibits the sale of financial assets, and also because if those sales are authorized, the ruble has lost so much value that the losses would be enormous.”, he stresses.

“For many companies the issue of leaving does not arise; they are trapped because they have important properties and assets in Russia, production sites that they cannot close and sell overnight”, highlights Sébastien Jean, director of the Center for Prospective Studies and International Information (Cepii).

He underlines that the war in Ukraine and the strong sanctions applied to Russia by Western countries plunge foreign groups “into great uncertainty about how the Russian economy will evolve in the coming months, and also about what the retaliatory Russian sanctions will be, for what many may fear confiscations of some of their properties or assets”, according to him.

Following “minute by minute”

Among the most exposed sectors is energy: the Austrian oil and gas group OMV, which owns 24.99% in a gas field in Siberia and co-finances the Nord Stream II gas pipeline, indicated that “constantly evaluates the situation to take possible measures if necessary”.

“For now, the sector is not subject to sanctions due to its importance for the energy supply, but we are aware of this and of the decisions that can be taken”, declared the general director of the French nuclear group Orano, Philippe Knoche.

The agri-food group Danone indicated that “Of course, it follows the situation closely and carries out all the necessary actions to guarantee the safety of its employees and the continuation of its activities.”.

The Russian marketit is not important enough to represent a structural danger for many companies”, points out however, relativizing, Sébastien Jean.