Shell to end equity partnerships with Gazprom entities

Intention to exit entities includes involvement in Nord Stream 2 natural gas pipeline

Shell’s board of directors have announced its intention to exit its joint ventures with Gazprom and related entities.

The company’s decision came on the fifth day of Russia’s war on Ukraine and includes its 27.5% stake in the Sakhalin-II liquefied natural gas (LNG) facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture, and an end to its involvement in the Nord Stream 2 gas pipeline project.

Shell became the third company to end joint ventures and projects in Russia after bp and Equinor.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” said Shell’s Chief Executive Officer, Ben van Beurden, in a statement Monday.

“Our decision to exit is one we take with conviction. We cannot and we will not stand by. Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia,” van Beurden said. “In discussion with governments around the world,we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”

According to the statement, Shell had around $3 billion in non-current assets in these ventures in Russia.

“We expect that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s Russia assets and lead to impairments,” the company said in the statement.

Last year, Shell share-adjusted earnings from the Sakhalin Energy Joint Venture (JV) and the Salym JV were around the $0.7 billion level.

Shell has a 27.5% interest in the JV in Sakhalin-2, the integrated oil and gas project located on Sakhalin island. Other ownership interests are Gazprom with 50%, Mitsui with 12.5% and Mitsubishi with 10%.

Shell is also one of five energy companies that each have committed to providing financing and guarantees for up to 10% of the estimated €9.5 billion total costs of the project.


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