Shell in discussions to sell stake in Russian Sakhalin-2 LNG venture
On March 8, 2022, Shell announced its intention to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner in the wake of Russia’s invasion of Ukraine. The British publicly traded multinational oil and gas company will also shut its service stations, aviation fuels and lubricants operations in Russia.
On April 21, it was reported that Shell is in joint discussions with China’s state-run energy companies to offload its 27.5% stake in the Sakhalin-2 liquefied natural gas (LNG) venture. Sakhalin-2 is one of the world’s largest integrated, export-oriented, oil and gas projects and Russia’s first offshore gas project. The venture is operated by the Russian majority state-owned multinational energy corporation, Gazprom, which holds a controlling stake of 50%. Shell, Mitsui and Mitsubishi are the other shareholders.
Deliberations are at an early stage and the sale of Shell’s interest to one or several Chinese firms is no certainty, with suggestions Shell may also hold talks with buyers outside of China. China’s state-backed energy firms are also likely to be cautious concerning Russian issues.
Earlier this month, Shell indicated that it would need to write down USD 5 billion off the back of its decision to exit Russia.
Likewise, British energy giant, BP, is looking to cut ties with Russia. BP has worked in Russia for more than 30 years. On February 27, the company confirmed it would offload its 19.75% stake in Rosneft, a Russian-controlled oil company. Some estimates have suggested Rosneft had contributed about a third of BP’s oil-and-gas production. In late March, further reports suggested BP Plc has reached out to state-backed firms in Asia and the Middle East as it searches for a way to offload its Russian assets.