Russia bans foreign investors from selling stakes in energy projects

Russia bans foreign investors from selling stakes in energy projects

Russia has stepped up pressure on the West, as investors from so-called unfriendly countries have been banned from selling shares in key energy projects and banks until the end of the year.

Western countries and allies, including Japan, have imposed financial restrictions on Russia since it sent troops into Ukraine in late February. Moscow retaliated with obstacles for Western businesses and their allies leaving Russia, and in some cases seized their assets.

The decree, signed by President Vladimir Putin and published on Friday, bans investors from countries that supported sanctions on Russia from selling their assets in production sharing agreements PSA banks, strategic entities, companies producing energy equipment, as well as other projects, from oil and gas production to coal and nickel.

The decree said that Putin could issue a waiver in certain cases for the deals to go ahead, and the government and the central bank should prepare a list of banks for the Kremlin's approval. There was no investor by name in the decree.

The ban covers almost all big financial and energy projects where foreign investors still have stakes, including the Sakhalin 1 oil and gas project.

On Thursday, Russian state oil champion Rosneft blamed ExxonMobil for the fall in output at the Sakhalin-1 group of fields, after the U.S. energy major said it was in the process of transferring its 30% stake to another party. A government decree signed on August 2 gave foreign investors a month to claim their stakes in a new entity that will replace the existing project, as well as the Sakhalin 2 liquefied natural gas LNG project - Royal Dutch Shell and Japanese trading houses Mitsui Co and Mitsubishi Corp.

The new decree does not cover the Sakhalin 2 project, it said.

Shell was looking for options to withdraw from the project while Japan's government reiterated its wish for the Japanese companies to maintain their stakes there.

Italy's UniCredit and Intesa, the U.S. group Citi and Austria's Raiffeisen are searching for options to exit Russia, while others such as Societe Generale and HSBC have found a way out.

Citigroup declined to comment on Friday, but in a filing on Thursday, the bank said it will continue to reduce its operations and exposures to Russia.

Citigroup has stopped securing any new business or new clients in Russia, it said.

Citigroup disclosed $8.4 billion in Russia exposure as of June 30, compared to $7.9 billion at the end of the first quarter. The exposure went up due to a rise in the value of the rouble.