Companies are avoiding Moscow also because Western sanctions are biting

Russia’s invasion of Ukraine has sparked a rapidly growing list of companies avoiding Moscow, with companies struggling to sever ties as foreign governments tighten criminal economic sanctions.

Russia attacked Ukraine on several fronts on Tuesday, the sixth day of the war, with a 40-kilometer convoy of tanks and other vehicles threatening the capital, Kyiv. However, President Vladimir Putin’s troops continue to face fierce Ukrainian resistance.

The Kremlin has become increasingly isolated in recent days, with the United States and Western allies imposing an extraordinary set of measures that have led to a sharp fall in its currency.

The merger of Russia’s invasion of Ukraine and the ensuing flurry of Western sanctions sparked a massive corporate exodus from Moscow.

In an exceptional 24-hour period until Monday, European energy companies BP, Shell and Equinor announced plans to close joint ventures in Russia.

“We are shocked by the loss of human lives in Ukraine, which we regret as a result of a senseless act of military aggression that threatens European security,” Shell CEO Ben van Beurden said on Monday.

Equinor President and CEO Anders Opedale said on Monday that the company had decided to suspend new investments in Russia because its position had become “unsustainable”.

BP chairman Helge Lund said on Sunday that Russia’s military action was a “fundamental change” and the company’s 19.75% stake in Russian-controlled oil company Rosneft “simply cannot continue”.

“This is amazing,” Nigel Gould-Davis, a senior fellow with Russia and Eurasia at the International Institute for Strategic Studies, said on Twitter shortly after Shell announced he would leave all of his Russian operations.

“What are the limits of economic separation now?” [the] West? ”Gould-Davis said.

The global bank HSBC, France’s Société Générale and South Korea’s Shinhan Bank have severed ties with a number of Russian banks, enforcing Western sanctions against the SWIFT interbank messaging system.

Swedish carmaker Volvo has said it will suspend supplies to Russia until further notice, while Germany’s Daimler Truck said on Monday it would immediately freeze its business in the country.

The world’s largest aircraft leasing company, AerCap, said on Monday it would end leasing operations with Russian airlines in compliance with applicable sanctions against Moscow.

US payment card companies Visa and Mastercard have blocked a number of Russian financial institutions from their network following government sanctions over the Kremlin’s invasion of Ukraine.

The shipping giant Maersk said on Tuesday that it would temporarily suspend all container deliveries to and from Russia in response to Western sanctions, according to Reuters. The company has previously warned that it is considering a possible suspension of all bookings to and from Russia.

A Maersk spokesman was not immediately available for comment when he contacted CNBC.

Investors are also being withdrawn from Russian companies. The $ 1.3 trillion Norwegian state fund, the world’s largest, said on Sunday it would sell its Russian assets while the Australian sovereign wealth fund announced plans to liquidate Russian assets.

For some, the severance of ties with Russia marks the end of more than three decades of investment there since the collapse of the Soviet Union in 1991.

The situation in Ukraine has led many to conclude that the financial and reputational risks of continuing operations in Russia are now too great.

Speaking to Hadley Gamble of CNBC in an interview Monday, Ukrainian Foreign Minister Dmytro Kuleba called on all companies still doing business with Russia to sever ties immediately.

“The world will judge them accordingly. And history will judge them accordingly,” Kuleba said.

This comes with increasing pressure on companies that have not yet taken action. In the energy sector, for example, the French TotalEnergies and the American giant ExxonMobil are now the only remaining supermajors with significant drilling operations in Russia.

Asked about these two companies, Kuleba said: “I can call and invite them and all other businesses. If they want to save the peace, if they want to save the lives of civilians, they have to stop doing business with Russia. “

“Stop your business with Russia. If you have a moral basis, do it immediately, without any delay. Trade with Russia is financing aggression, killing civilians and destroying peaceful cities,” he added.

TotalEnergies on Tuesday condemned Russia’s military aggression against Ukraine and said it would no longer provide capital for new projects in Russia.

“TotalEnergies supports the scope and strength of the sanctions imposed by Europe and will apply them regardless of the consequences (which are currently being assessed) on its activities in Russia,” the company said.

An ExxonMobil spokesman was not immediately available for comment when he contacted CNBC.

Shell has said it will abandon all of its Russian operations, including Sakhalin’s leading liquefied natural gas plant, in which it owns a 27.5 percent stake – 50 percent owned and operated by Russian gas giant Gazprom. The company has also announced plans to end its involvement in the highly controversial Nord Stream 2 pipeline project.

– Matt Clinch of CNBC contributed to this report.