Equinor and Daimler Truck sever relations with Russia as Volvo halts car deliveries
Norwegian oil group Equinor and German Daimler Truck are ending partnerships with Russian firms while Volvo said it was halting car deliveries to the country as the trade fallout from the Ukraine invasion wears off propagate.
The announcements come as multinational groups operating in Russia grapple with the reputational impact of their association with the country as well as potential exposure to Western sanctions designed to inflict severe economic hardship.
Renault also said on Monday it was suspending operations at one of its Russian factories for a week as the automaker grapples with a supply chain disruption.
A day earlier, BP said it was selling its nearly 20% stake in Rosneft after chairman Helge Lund called Russia’s invasion of Ukraine “an act of aggression that has tragic consequences across the region. “.
Equinor said it was “coming out” of joint ventures in Russia that include a strategic partnership with state oil group Rosneft encompassing projects across Siberia.
Anders Opedal, Managing Director of Equinor, said: “In the current situation, we consider our position to be untenable. We will now stop new investments in our Russian business and we will begin the process of exiting our joint ventures in a way that is consistent with our values.
He said Equinor, which is two-thirds owned by the Norwegian government, was “deeply disturbed” by Russia’s invasion of Ukraine.
Daimler Truck, the world’s largest truckmaker, said it had taken the decision to “immediately suspend all our business activities in Russia” even though its contract with local automaker Kamaz limits cooperation to the manufacture of civilian vehicles. On the other hand, Kamaz, which was created under the Soviet Union, manufactures utility vehicles for the Russian armed forces.
Volvo Cars specifically cited the impact of financial sanctions from the West saying it “will not deliver any cars to the Russian market until further notice”. The decision is due to “potential risks associated with trading materials with Russia, including sanctions imposed by the EU and the United States.”
Truck maker Volvo, which is independent of the automaker, has also halted production at its sole plant in Russia and sales in the country until further notice, the group said on Monday, citing the risk of sanctions.
Following warnings from other automakers that they may struggle to transport components to and from Russia, Renault said it has temporarily closed its Moscow plant, which produces models such as the Renault Captur and its Arkana SUVs, due to supply chain issues.
Another factory of the French group operated by its Russian company Avtovaz also halted production on Monday, but that was due to shortages of semiconductors, a spokesman said. Manufacturing was to resume there on Tuesday.
Russia is the Renault group’s second-largest market by sales volume, while Avtovaz accounted for around 7% of its overall revenue last year.
Equinor said it plans to take business-related writedowns. The company has had a presence in Russia for more than 30 years and expanded its partnership with Rosneft in 2020, paying $550 million to acquire a 49% stake in a dozen exploration and production licenses in Eastern Siberia.
Equinor’s current production in Russia is modest at just 25,000 barrels of oil equivalent per day compared to a total of around 2 million barrels per day for its group. It has 70 employees in Russia.
The Norwegian government on Sunday ordered its $1.3 billion oil fund, the world’s largest sovereign wealth fund, to drop its $3 billion in Russian investments.
Daimler Truck’s decision is unlikely to have a big impact on its profits, as the truck maker only sells a few thousand units in Russia each year.
Mercedes-Benz AG, which in its previous form of Daimler AG was the parent company of Daimler Truck, said it was also considering selling a 15% stake in Kamaz.