Shell has officially withdrawn from the Sakhalin-2 project

Shell has officially withdrawn from the Sakhalin-2 project

Shell is officially withdrew from the Sakhalin-2 project

  The Shell concern has officially withdrawn from the project «Sakhalin-2»

The oil and gas concern Shell has notified the Russian authorities of the withdrawal of their Sakhalin-2 project after the re-registration of the operating company in Russia, Kommersant reports.

Shell became the only participant in Sakhalin-2 to leave the project after the nationalization of Sakhalin Energy's assets and the transfer of project operator rights to LLC Sakhalin Energy. The Anglo-Dutch oil and gas giant owned 27.5% in Sakhalin-2. Other project participants retained their shares: Gazprom (50% plus one share), as well as Japanese Mitsui (12.5%) and Mitsubishi (10%).

The Shell stake is to be sold by the Russian government within four months of the independent valuation. The company valued its own stake at 1.6 billion rubles, and also stated that Shell “reserves all its legal rights” as a shareholder of Sakhalin Energy. According to experts, this may mean that the company may file a lawsuit to recover the value of its share, where the defendants may be the Russian Federation, Gazprom or Sakhalin Energy LLC. Due to the loss of the contract with Sakhalin Energy, Shell may lose 1 million tons of liquefied natural gas per year.

In late July, Russian President Vladimir Putin signed a decree on the transfer to the state of the assets of the Sakhalin Energy joint venture, the operator of a large international project “Sakhalin-2”. The document says that the decision was made in connection with “unfriendly and contrary to international law” actions of the United States and the states and organizations that joined them, aimed at imposing sanctions against Russia. The new operator, Sakhalin Energy LLC, is registered in Yuzhno-Sakhalinsk.

Oil production under another Sakhalin-1 project has been halted since May 15 after the project operator, the American company ExxonMobil, announced a phase-out production from 26 April. The operator company announced its withdrawal from the project after the Russian invasion of Ukraine.