Shell and Siemens Exit Russia

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Russia's invasion of Ukraine continues to take its toll on its own economy and international business as energy company Shell Plc (NYSE:SHEL) and industrial giant Siemens have signaled their withdrawal from the country.

Shell is following through on its commitment in March to withdraw from Russia by announcing the sale, for an undisclosed amount, of its local subsidiary Shell Neft, including 411 retail stations, to Lukoil, the second largest producer of crude oil there after state-owned Rosneft. Shell was one of a number of oil and gas majors to announce their planned exit from Russia earlier this year. For additional information, see March 1, 2022, article--BP, Equinor, Shell Pulling Out of Russia over Ukraine Invasion. Meanwhile, German industrial major Siemens has called time on 170 years operating in Russia and expects to take an initial financial hit of 600 million euro (US$625 million) during the second quarter, with more costs to come later in the year.

Along with Shell Neft's retail stations, which are mainly located in the central and northwestern regions of Russia, it has also offloaded its Torzhok lubricants blending plant, around 200 kilometers northwest of Moscow. "Our priority is the well-being of our employees," said Huibert Vigeveno, Shell's downstream director. "Under this deal, more than 350 people currently employed by Shell Neft will transfer to the new owner of this business."

Maxim Donde, Lukoil's vice president for refined products sales, added: "The acquisition of Shell's high-quality businesses in Russia fits well into Lukoil's strategy to develop its priority sales channels, including retail, as well as the lubricants business."

Siemens said that it will wind down its Russian business and exit the market "as a result of the Ukraine war." Proceedings to wind down its industrial operations and all industrial business activities, which employ more than 3,000 people, are underway. The company had previously committed to not investing in any new Russian projects. Roland Busch, president and chief executive officer of Siemens AG, said: "We condemn the war in Ukraine and have decided to carry out an orderly process to wind down our industrial business activities in Russia. This was not an easy decision, given our duty of care for our employees and long-standing customer relationships, in a market where we have been active for almost 170 years. We are evaluating the impact on our people and we will continue to support them to the best of our abilities. At the same time, we provide humanitarian assistance to our colleagues and the people of Ukraine and stand with the international community in calling for peace."

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