Author`s name Andrey Mihayloff

Foreign companies suffer a total of $70 billion in losses after they leave Russia

The losses that American, European and Japanese companies have suffered after they left the Russian market are evaluated at tens of billions of dollars, RIA Novosti reports. Since the beginning of the special operation in Ukraine to the present, foreign companies have lost a total of $70 billion.

Companies of the fuel and energy complex have suffered the biggest losses. Many companies in this sector have deconsolidated and devalued Russian assets by ceasing to report the results of their activities in the country, they have not completely stopped working in Russia.

For example, the UK-based BP, having made a number of statements about its decision to withdraw from Russian projects, was forced to retain shares in local assets. According to Putin's decree from August 5, shareholders from unfriendly countries will no longer be able to make transactions with shares in companies of strategic significane, fuel and energy companies and banks without the consent of the state. In its report for the first quarter of 2022, BP depreciated Russian assets in the amount of $25.5 billion, but it did not take practical steps to exit the projects.

The US-based ExxonMobil, whose subsidiary acts as the operator of the Sakhalin-1 project, found itself in a similar position. Exxon announced its intention to get rid of its stake, but did not have time to agree on the transfer of assets before the presidential decree was published. At the same time, after exiting the assets, the American company wrote off $4.6 billion before tax. Russia-related assets are written off the balance sheet as being unable to generate future income.

Other energy companies also faced losses that were worth billions and billions of dollars. For example, TotalEnergies of France reported write-offs of almost $7.6 billion, Mitsui & Co and Mitsubishi Corporation of Japan — about $1.64 billion. Linde engineering company and Austrian OMV lost $1 billion each. Another French company, Engie, with a stake in the Nord Stream gas pipeline, wrote off $305 million.

Some other companies managed to sell part of their assets in Russia. For example, oil and gas giant Shell sold its filling stations and lubricants plant to Lukoil and exited joint ventures with Gazprom Neft. In the first quarter of this year, due to the suspension of activities in the country, Shell wrote off $3.9 billion from its balance sheet. Norway's Equinor got rid of all assets in Russia having lost as much as $1.08 billion. Germany's Uniper suffered about $2.7 billion of losses, including those related to investments in the gas pipeline; Wintershall Dea lost about $1.5 billion in total.

Food companies have lost a lot less, and they hope to return to the Russian market. In total, foreign producers of alcohol and food products have written off from $40 million to $1.6 billion after they left the Russian market. Unilever of the UK suffered the smallest losses, whereas those of USA's PepsiCo were the largest.

Automotive companies and companies of the technical sector also started selling Russian assets. Germany's Mercedes-Benz suffered significant losses of about $1.4 billion, while Finland's Nokia wrote off about $100 million.

Companies in the banking sector also reported multi-billion-dollar losses. Societe Generale (France) estimated its losses at $3 billion, while MasterCard and Visa international payment systems reported $37 and $60 million in losses respectively.

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