Russian President Vladimir Putin on Wednesday signed the decree nationalizing the stake of the German Wintershall Group and the Austrian company OMV in the Yuzhne-Russkoye gas field.
In total, the two companies own 60% of the oil field’s shares. Ownership will be transferred to new Russian companies created on the basis of the law.
In the first half of the year, the Kremlin prepared a legal framework for the nationalization of assets located in Russia belonging to companies from so-called “hostile countries”.
Although the original owners should receive compensation for their old property, the amount of compensation is determined by the Russian government, so it could be many times less than the market value of their assets.
Commenting on the new Russian legislation, Russian opposition politician Mikhail Khodorkovsky told Politico that foreign companies operating in Russia no longer have any legal protection. Khodorkovsky himself lost much of his fortune when Russian authorities confiscated his shares in the Yukos oil company.
“Investment security is not fully guaranteed anywhere, but Vladimir Putin’s regime has clearly built an illegal and illegitimate state,” the opposition politician explained.
Many Western energy companies decided to leave Russia after the Kremlin’s full-scale invasion of Ukraine in February 2022. For example, US-based Exxon Mobil and Norway’s Equinor closed their operations in Russia.
However, other companies such as Wintershall, OMV, TotalEnergies, BP and Shell continued to operate in Russia, arguing that it was difficult to attract business and build assets in the country.
According to experts, Putin’s decisions may have negative effects on Russia in the long term. Ending Western investment and banning the export to Russia of technologies used to extract oil and gas could reduce the long-term productivity of the Russian oil and gas sector.
The energy sector is not the only one whose foreign owners have lost their assets in Russia. The Kremlin has already seized the Russian assets of Danone and Carlsberg after their owners decided to cease operations in the country.
2023-12-20 13:42:00
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