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Shell may have to write off investment of more than £3bn in major Russian gas project after Vladimir Putin moves to seize control of site
Shell may have to write off an investment of more than £3billion in a major Russian gas project after Vladimir Putin moved to seize control of the site.
The Kremlin has drawn up plans to transfer ownership of the Sakhalin-2 plant, located in the far east of the country, to a new Russian firm citing national and economic security interests.
Putin has given the project’s backers a month to decide whether they will take a holding in the new company, meaning those that refuse could lose all their money. Shell owns nearly 28 per cent of the Sakhalin-2 plant worth around £3.4billion.
As a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements,’ it added.
Shell shares dropped 0.6 per cent, or 13p, to 2121p following the announcement. The oil giant previously pledged to exit the project and make no further investments in Russia following the invasion of Ukraine.
Shell boss Ben van Beurden said the firm was making progress in discussions over a sale, with several Chinese state-run energy firms thought to be interested.
But the latest development means the company may be left out of pocket if it fails to secure a buyer within the one-month time frame.
Two Japanese firms, Mitsui and Mitsubishi, also hold large stakes in the project but have already decided to continue backing Sakhalin-2 to keep exports flowing.
Moscow is seeking to tighten the screw on global energy markets in response to western sanctions imposed following the outbreak of the Ukraine war. The situation has caused oil and gas prices to spiral.
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