Equinor Completes Exit From Russia
The exit comes after Equinor's presence of more than 30 years with the transfer of its interests in joint ventures to Rosneft and its stake in the Kharyaga PSA to operator Zarubezhneftegaz.
Norway’s Equinor has finished the transfer of its minority stakes in joint ventures (JVs) with Rosneft to the state-owned Russian major, as well as signing off on an agreement to exit it’s 30% share of the Kharyaga production-sharing agreement (PSA) operated by another Russian state-owned oil producer, Zarubezhneftegaz.
The agreements effectively end Equinor’s (previously Statoil’s) more than 30-year presence in Russia, releasing it “from all future commitments and obligations” to any of its former Russian partners, according to a press release issued by the company on 25 May.
Equinor joined Shell and BP in announcing on 27 February their intent to sever business ties with Russia, 3 days after Russian troops had crossed the border into Ukraine. On 2 March, ExxonMobil followed suit and has since declared force majeure on its Sakhalin 1 project with Rosneft, India’s ONGC, and Japan’s SODECO.
Equinor announced an impairment of $1.08 billion on its balance sheet as of 31 March 2022, a move that Equinor’s President and CEO Anders Opedal had predicted in February when he noted that the company’s departure from Russia would “impact the book value” of the $1.2 billion in noncurrent assets it held in Russia at yearend 2021 and “lead to impairments.”
Equinor’s oldest project in Russia was the Kharyaga PSA which it farmed into in 1996 as Statoil. Russia’s state-owned Zarubezhneftegaz operates Kharyaga in the Timan-Pechora basin 60 km from the Arctic Circle.
The Kharyaga PSA license provided Equinor an equity production of approximately 10,000 B/D for its 30% share; Russia’s state-owned Zarubezhneft held 40% at the time of Equinor’s exit; France’s TotalEnergies holds 20%; and Nenets Oil Company, 10%.
TotalEnergies has so far retained its interests in Russia and remains a partner with Zarubezhneftegaz in Kharyaga, although it has stated it will not be making any new investments in Russia.
In 2012, Equinor (as Statoil at the time) had signed an agreement of cooperation with Rosneft which over the decade since had resulted in the following ongoing projects.
- AngaraOil. In partnership with Rosneft, Equinor had acquired 49% in KrasGeoNaC (KGN) (later renamed AngaraOil) in December 2020. KGN holds 12 conventional exploration and production licenses in East Siberia. One of those licenses, North Danilovsky, began producing in July 2020 and was expected to reach 40,000 B/D by 2022, according to the partners.
- Domanik. Equinor held a 49% stake in a JV with Rosneft to run a 3-year pilot program assessing the potential for commercial production from the Domanik limestone formation in the Samara region of southern Russia.
- North Komsomolskoye. In 2017, Equinor took a 33% share in the Sevkomneftegaz JV with Rosneft, which holds the license and operates North Komsomolskoye in West Siberia. In 2019, the partners took the final investment decision on the first stage of full-field development with a design capacity of 99,000 BOPD and 6 million Sm3/D for gas, oil and gas export pipelines, and 236 wells. To date, 70 wells have been completed, and early-phase test oil production totals 12,000 B/D (100%). In January 2021 the field produced its first 1 million tons of oil and condensate.
- In 2021, Equinor had signed a cooperation agreement on carbon management with Rosneft to reduce the carbon footprint of their joint operations and develop new low-carbon solutions for implementation.