Major investors announced the divestment of their Russian assets and operations as the Kremlin wages war on Ukraine and Western governments approve a package of strict sanctions aimed to isolate the country financially. 

“In the current situation, we regard our position as untenable,” said Anders Opedal, president and CEO of Norwegian energy company Equinor, in a statement on February 28. The company reported $1.2bn in non-current assets in Russia. 


Equinor, which is controlled by the Norwegian government through a 67% majority stake, “will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values”, Mr Opedal said. 

The Norwegian government also instructed the country’s sovereign wealth fund, the world’s biggest of its kind, to do the same. 

‘Given the way the situation has evolved, we consider it necessary for the fund to divest its Russian assets,’ said minister of finance Trygve Slagsvold Vedum.    

Meanwhile, British energy company BP announced its intention to sell its 19.75% stake in Russian energy company Rosneft. 

“Our involvement with Rosneft, a state-owned enterprise, simply cannot continue,” BP’s chair Helge Lund said in a statement on February 27. 

Other major Western companies have put their Russian operations on hold. German manufacturer Daimler Truck said it would suspend its business activities in Russia, where it produces heavy-duty vehicles and components in partnership with Russian Kamaz “with immediate effect” in a tweet on February 28. US logistics firms UPS and FedEx said they would halt deliveries to and from Russia and Ukraine. 

The US, UK and EU have approved a tough sanctions package in the aftermath of Russian invasion of Ukraine to isolate the country and its oligarchs financially, and build up pressure on president Vladimir Putin. Among other things, the sanctions intend to cut off Russia’s central bank from trading with its counterparts in the West, and even accessing and deploying the country’s international reserves. They also intend to remove major Russian banks from the Swift international payment system, which would prevent them from trading in cross-border operations (the banks list is yet to be disclosed).

The sanctions had an immediate impact on the ruble, which tumbled to historic lows against the dollar in early trading on February 28. 

Accumulated foreign direct investment (FDI) in Russia, which tracks the stock of active FDI interests in the country in any given year, stood at $446.7bn at the end of 2020, according to Unctad data. 

Despite the sanctions imposed in the wake of the 2014 crisis in Crimea, Western investors make up the bulk of the inward investment that flows into Russia every year. On average, investors from OECD countries made up about 80.8% of the FDI projects announced in Russia since 2014, according to figures from foreign investment monitor fDi Markets. 

In the immediate aftermath of the invasion, it soon became clear that the fate of the operations and assets of foreign companies in the country would hang in the balance. 

“There will be a major operational hurdle to be able to conduct business. It’s very difficult to understand how financial payments will be processed [if these banks are sanctioned],” Livia Paggi, the head of geopolitical risk at GPW Group, told fDi on February 24

With the latest round of tough sanctions casting a very wide net, any investor with interest in Russia is scrambling to reassess its local interests. 

“The White House is beginning the process of identifying the assets of sanctioned individuals and companies that support and enable Putin’s actions. Following an analysis of [New York five pension] funds’ holdings against that list and legal review, I plan to bring specific assets to the trustees of the five boards of the New York City (NYC) Retirement systems to consider for divestment,” New York comptroller Brad Lander wrote in a tweet on February 27. NYC five pension funds reported assets under management of $274.7bn at the end of 2021. Other pension funds in the US and Australia have announced similar steps. 

The mechanics of these divestments remain a question mark at the moment, though. The Moscow Stock Exchange remained closed on February 28 and the central bank even ordered market players to reject foreign clients’ bids to sell Russian securities. Should any such transaction go through, either it be publicly traded assets or private assets, sellers will have to take on major impairments. BP has already disclosed losses from its Rosneft sale could amount to as much as $25bn coming both from foreign exchange losses and valuation losses. Plus, it remains to be seen whether there will be any open channel for sellers to repatriate any proceeding from their divestments considering the level of financial isolation that sanctions want to achieve.