THE SHELL LEAKS FILES: 18 SEPTEMBER 2026
SLF-2007-061
The Sakhalin Papers LI: The Billion-Rouble Exit Price — Novatek, Gazprom and the US$1 Billion Shell Still Could Not Simply Collect
In April 2023, the Russian government put a precise price on the 27.5% Sakhalin II interest Shell had declined to take in the replacement Russian operator: 94.8 billion roubles. Novatek was approved as purchaser. Shell’s response was immediate — no money had been received and its legal rights remained intact. Eleven months later, Moscow cancelled the Novatek arrangement and substituted a Gazprom-owned company at exactly the same price. The stake changed hands. The cash did not simply pass to Shell. By 2024, the 94 billion-rouble pot had become entangled with restricted-account rules and a much larger Russian claim against Shell. The corporate exit announced in February 2022 had become a battle over who was entitled to the exit proceeds.
1. A price finally appeared
The previous instalment followed Shell out of the operating Sakhalin II project.
By April 2023, Moscow had reached the next stage.
Russian Government Order No. 890-r, dated 11 April 2023, approved the sale of the unclaimed 27.49999998621683%interest in the new Sakhalin Energy LLC for:
94.8 billion roubles
and designated Novatek Moscow Region LLC as purchaser. Interfax reported that the order had been published through Russia’s official legal-information system. (Interfax)
At the exchange rate quoted in contemporaneous Reuters reporting, that amounted to approximately US$1.16 billion. (Royal Dutch Shell Plc .com)
The precision of the Russian order is striking.
Not simply “about 27.5%.”
Not simply “approximately 95 billion roubles.”
The legal instrument identified the interest to fourteen decimal places and fixed the price at 94.8 billion roubles.
But fixing a price was not the same thing as paying Shell.
2. This was not a conventional Shell sale
The legal structure needs to remain clear.
Shell had not negotiated with Novatek and signed an ordinary share-purchase agreement transferring its original Bermuda-incorporated Sakhalin Energy shares.
Following President Vladimir Putin’s June 2022 decree, the operating rights and obligations of the old Sakhalin Energy Investment Company had been moved, under Russian law, into a newly created Russian company.
Mitsui and Mitsubishi elected to participate in that company.
Shell did not. (Interfax)
The 27.5% interest being allocated by Moscow in 2023 was therefore an unclaimed interest in the replacement Russian operator.
That distinction matters because Shell has continued to state that it retains legal rights connected with its 27.5% minus one share interest in the original Bermuda company. (BOE Report)
The Russian state was arranging disposition of the new Russian-company interest.
Shell was preserving its legal position concerning the old one.
Those were related, but not identical, propositions.
3. Novatek appeared to have won
Novatek had publicly expressed interest in acquiring the interest.
The Russian government then approved it as buyer at the 94.8 billion-rouble valuation. (Interfax)
Contemporaneous Reuters reporting described the transaction straightforwardly as Moscow approving the sale of Shell’s former 27.5% stake in Sakhalin II to Novatek. (Royal Dutch Shell Plc .com)
From outside, the sequence appeared simple:
Shell had left.
Russia had valued the interest.
Novatek would buy it.
Shell would receive compensation.
But almost immediately, Shell inserted an important qualification.
4. Shell: “No payments have been made”
On 4 May 2023, Shell Chief Financial Officer Sinead Gorman was asked about reports that the Sakhalin interest had been sold to Novatek.
Her answer was concise:
“No payments have been made and we retain our legal rights.”
Interfax recorded Gorman emphasising that Shell was aware of Russian press reports but had not received the proceeds. (Interfax)
That sentence is one of the key documentary markers in Shell’s Russian withdrawal.
Moscow had selected a purchaser.
Moscow had fixed a price.
Russian media were discussing the foreign-exchange consequences of transferring nearly 95 billion roubles.
Yet Shell said it had received nothing.
The difference between a government-approved disposition and a completed payment was already becoming apparent.
5. Russian rules contained another obstacle
The Russian mechanism did not simply say:
buyer pays 94.8 billion roubles;
Shell receives 94.8 billion roubles.
Interfax reported that foreign partners could receive proceeds only after determining and offsetting compensation for alleged damage connected with implementation of the project. (Interfax)
That qualification descended directly from the special legal machinery imposed after Russia’s invasion of Ukraine and the subsequent rupture with Western companies.
In other words, the 94.8 billion roubles represented a valuation and sale price.
It did not necessarily represent an unconditional debt immediately payable to Shell.
That difference would later become crucial.
6. The money briefly became a foreign-exchange story
During April 2023, Russian reporting even linked the proposed Shell payment with movements in the rouble.
The suggestion was that conversion and repatriation of nearly 95 billion roubles could create significant demand for foreign currency.
Russian officials pushed back against exaggerated interpretations.
Interfax reported Deputy Finance Minister Alexei Moiseyev pointing out that large foreign-exchange transactions connected with corporate exits were subject to restrictions imposed by the Central Bank. (Interfax)
This episode illustrates how real the expected payment appeared at the time.
Markets were discussing how Shell might convert the money.
Shell was saying it had not received it.
7. The Novatek deal then stalled
The expected transaction did not proceed to the straightforward conclusion implied by the April 2023 order.
Almost a year passed.
Then Moscow changed the buyer.
On 23 March 2024, the Russian government issued Order No. 701-r.
The Novatek order was declared invalid.
In its place, the government approved Sakhalin Project LLC as purchaser. (Interfax)
Sakhalin Project was part of the Gazprom group.
And the price?
Exactly the same:
94.8 billion roubles
There was no newly negotiated valuation.
The state changed the buyer.
The figure survived unchanged.
8. Moscow gave no public explanation for replacing Novatek
Reuters reported that the Russian government nullified the year-old decision to sell the interest to Novatek without explaining why. (Business Standard)
Interfax likewise recorded that Gazprom had replaced Novatek as purchaser and that the April 2023 order was no longer valid. (Interfax)
The archive therefore should not invent an explanation.
It is possible to speculate about commercial, political or legal reasons.
There is no need.
The documentary fact is sufficient:
Novatek was approved in April 2023.
The Novatek transaction did not move forward.
Gazprom’s vehicle replaced it in March 2024.
The 94.8 billion-rouble price remained unchanged.
Anything beyond that requires evidence.
9. Gazprom ended up controlling nearly 78%
Before the restructuring, Gazprom had held just over 50% of Sakhalin Energy.
Mitsui retained 12.5%.
Mitsubishi retained 10%.
The acquisition of the former Shell allocation took Gazprom’s effective interest in the replacement operator to approximately 77.5%. (Interfax)
The ownership transformation was therefore substantial.
Shell, which had once led development of Sakhalin II, was outside the Russian operating company.
Gazprom now exercised overwhelming control.
The Japanese partners remained.
The project itself continued producing LNG.
But Shell’s financial rights connected with the exit were still unresolved.
10. Shell again reserved its rights
When Reuters reported the Gazprom transaction in March 2024, Shell did not describe the matter as a normal completed sale from which it had received the purchase price.
Its statement was carefully worded.
Shell said it could not comment on matters relating to the Russian government decree process and added that it reserved all legal rights relating to its 27.5% minus one share interest in Sakhalin Energy Investment Company Ltd. (BOE Report)
This language is significant.
Shell was not accepting the proposition that Moscow’s disposal of the replacement-company interest had extinguished every right Shell associated with its original investment.
Nor did Shell publicly acknowledge receipt of the 94.8 billion roubles.
The legal position had become layered:
Russia had transferred the project into a Russian entity.
Shell had refused to join it.
Russia had valued the unclaimed interest.
Russia had designated Novatek.
Russia had cancelled Novatek.
Russia had designated a Gazprom company.
Gazprom had acquired the interest.
Shell continued reserving its rights.
That is not a conventional divestment.
11. The dollar value changed even though the rouble figure did not
There is an instructive detail in the contemporaneous reporting.
When Novatek was approved in April 2023, Reuters valued 94.8 billion roubles at approximately US$1.16 billion. (Royal Dutch Shell Plc .com)
When the Gazprom-controlled buyer was approved in March 2024, Reuters valued the same 94.8 billion roubles at approximately US$1.02 billion. (Business Standard)
Nothing had changed in the Russian government’s nominal valuation.
The exchange rate had.
That is another reminder that even if Shell ultimately became entitled to the full rouble amount, the value of the compensation in Shell’s reporting currency was not fixed.
Time itself was changing the economics.
12. Gazprom’s accounting tells another part of the story
The Russian buyer did not subsequently account for the Sakhalin interest as though 94.8 billion roubles represented the full economic value of what it obtained.
Gazprom’s financial reporting later recognised a very large gain associated with increasing its Sakhalin II interest.
Bloomberg reported that Gazprom provisionally recognised a gain of approximately 167.4 billion roubles in the first half of 2024 after purchasing Shell’s former 27.5% allocation. (The Star)
Later reporting said that figure was revised upward.
The accounting point is important but should not be overstated.
A bargain-purchase gain does not prove that Russia deliberately cheated Shell or establish what Shell would have obtained in an unrestricted arm’s-length sale.
Accounting fair-value measurements and politically constrained exit prices are not the same thing.
What it does establish is that Gazprom itself recognised an economic value from the acquisition materially greater than the cash price it paid.
13. The 94.8 billion roubles did not disappear
By October 2024, the compensation figure reappeared in an entirely different context.
Russia’s Prosecutor General brought proceedings against eight Shell-group entities.
Interfax reported that the Russian claim was approximately comparable in scale to the 94.8 billion roubles paid for the Sakhalin interest. (Interfax)
Shell’s own SEC filing later explained the position much more precisely.
According to Shell, the Russian prosecutor seeks a declaration allowing Gazprom Export to take approximately 94 billion roubles purportedly set aside for Shell for Sakhalin equity compensation from a Type-C account, and to offset that money against part of an alleged debt owed by Shell Energy Europe to Gazprom Export. (SEC)
The money had therefore travelled conceptually through several stages:
a valuation;
a proposed Novatek acquisition;
a Gazprom acquisition;
a restricted compensation pot;
and finally a potential litigation set-off.
Shell still had not simply collected the exit price.
14. The separate Russian claim is much larger
The 94 billion-rouble fund is only one component of the current dispute.
Shell’s latest annual reporting states that the Russian prosecutor also seeks approximately:
€1.5 billion
from Shell Energy Europe Limited for alleged unpaid gas deliveries during 2022. (Shell)
The prosecutor also seeks declarations concerning what it characterises as Shell’s unlawful abandonment of support for Sakhalin Energy Investment Company.
These are allegations.
They are not findings of liability.
That distinction is particularly important because the Russian proceedings remain unresolved in Shell’s latest authenticated annual report. (Shell)
15. The Sakhalin compensation became collateral in another dispute
This is perhaps the most revealing development in the entire exit-price saga.
The 94.8 billion roubles originally looked like compensation for an asset Shell could no longer operate.
By late 2024, Russia was seeking to use approximately that same pool of money to satisfy part of an entirely different alleged obligation.
A compensation mechanism had become a litigation asset.
That is why describing the March 2024 transaction simply as:
“Gazprom bought Shell’s Sakhalin stake for US$1 billion”
is incomplete.
Gazprom did acquire the replacement-company interest for that price.
But the documentary record does not show Shell simply receiving an unrestricted US$1 billion equivalent.
Shell’s own latest disclosures say the compensation is caught inside the dispute.
16. Shell still owns shares — but not the operating project
There is another apparent paradox.
Shell’s latest reporting continues to identify its 27.5% minus one share interest in Sakhalin Energy Investment Company Ltd, the Bermuda-incorporated predecessor entity.
At the same time, Shell notes that this company purportedly no longer holds the licences, rights and obligations associated with Sakhalin II. (Royal Dutch Shell Plc .com)
This is why phrases such as “Shell sold its Sakhalin stake to Gazprom” require qualification.
Economically, Gazprom acquired the 27.5% allocation in the new Russian operating company corresponding to Shell’s former position.
Legally, Shell continues to preserve rights connected with shares in the predecessor company.
The operating interest and the original corporate interest are no longer the same thing.
17. The project itself continued
None of this stopped Sakhalin II from producing LNG.
Interfax reported production of approximately 11.5 million tonnes of LNG in 2022. (Interfax)
Reuters later reported that production exceeded 10 million tonnes in 2023, with cargoes continuing to move principally to Asian destinations including Japan, South Korea and China. (BOE Report)
This is another important part of the story.
Shell withdrew.
The corporate vehicle changed.
Ownership changed.
The dispute over compensation persisted.
But the physical asset kept producing.
The project Shell had spent decades building did not disappear with Shell’s exit.
Its economic life continued under a different ownership structure.
18. The Japanese shareholders demonstrate the alternative path
Mitsui and Mitsubishi chose a different course.
They accepted interests in the replacement Russian company.
That decision preserved their direct participation in the operating project.
Shell chose not to.
There were obvious political, sanctions, governance and corporate-policy reasons for Shell’s withdrawal after Russia invaded Ukraine.
This archive does not suggest that remaining would necessarily have been preferable.
The comparison matters for another reason.
It shows that the subsequent compensation dispute was not an unavoidable consequence for every foreign shareholder.
It followed from Shell’s decision not to enter the replacement corporate structure and Russia’s imposed mechanism for disposing of the resulting unclaimed interest. (Interfax)
19. Was 94.8 billion roubles a fair price?
The documentary record does not permit a definitive answer.
Russia determined the valuation under a state-created mechanism after fundamentally restructuring the project.
The sale was not an unrestricted international auction.
Shell did not negotiate the transaction as seller in an ordinary commercial process.
Gazprom later recorded a substantial accounting gain from acquiring the additional interest. (The Star)
Those facts provide context.
They do not establish what an arm’s-length market price would have been.
Accordingly:
Established: Russia fixed the interest’s sale price at 94.8 billion roubles.
Established: Novatek was initially selected.
Established: Gazprom’s vehicle eventually acquired the interest at the same price.
Established: Gazprom subsequently recognised a substantial accounting gain associated with increasing its Sakhalin interest.
Not established: that 94.8 billion roubles represented fair market value.
Not established: that Shell was legally entitled to receive that full amount free of offsets or restrictions.
Not established: that Gazprom’s accounting gain measures any loss legally recoverable by Shell.
20. Shell’s latest position: uncertainty
The most recent authenticated Shell position is contained in its 2025 Annual Report and Accounts, published in March 2026.
Shell states that the Russian proceedings remain ongoing.
It says that the magnitude and timing of any possible obligations or payments cannot presently be estimated reliably.
It also describes a high degree of uncertainty surrounding the ultimate outcome and potential effects on future operations, earnings, cash flow and financial condition. (Shell)
Four and a half years after Shell announced its intention to leave Sakhalin II, that is where the documentary record stands.
Not with a clean closing statement.
Not with a confirmed payment.
But with:
an old Bermuda shareholding;
a Russian operating company Shell did not join;
a 94.8 billion-rouble acquisition price paid by a Gazprom entity;
a restricted compensation account;
and unresolved Moscow litigation.
Documentary Findings
Established: Russian Government Order No. 890-r of 11 April 2023 fixed the sale price of the unclaimed 27.5% Sakhalin Energy LLC interest at 94.8 billion roubles and selected Novatek Moscow Region LLC as purchaser. (Interfax)
Established: In May 2023, Shell CFO Sinead Gorman said Shell had received no payment and retained its legal rights. (Interfax)
Established: The Novatek transaction did not proceed as originally contemplated.
Established: Russian Government Order No. 701-r of 23 March 2024 replaced Novatek with Gazprom-controlled Sakhalin Project LLC while retaining the 94.8 billion-rouble price. (Interfax)
Established: Reuters reported the Gazprom entity’s acquisition of the 27.5% interest for approximately US$1 billion in March 2024. (Business Standard)
Established: Shell responded that it reserved all legal rights associated with its interest in Sakhalin Energy Investment Company Ltd. (BOE Report)
Established: Shell’s latest annual reporting says approximately 94 billion roubles purportedly set aside for Shell’s Sakhalin equity compensation is held in a Type-C account and is now the subject of a Russian request for set-off against an alleged debt. (Shell)
Established: The same Russian proceedings seek approximately €1.5 billion from Shell Energy Europe for alleged unpaid 2022 gas deliveries. (Shell)
Alleged: The Russian prosecutor’s assertions concerning Shell’s conduct and unpaid gas obligations remain allegations in pending litigation.
Not established: that Shell has received the 94.8 billion roubles.
Not established: that Russia’s valuation represented unrestricted fair-market value.
Not established: that Shell will ultimately recover the compensation or be liable for the claims now asserted against it.
Commentary
Shell’s Sakhalin exit is a useful demonstration of the difference between leaving an asset operationally and leaving it legally.
Operationally, Shell was gone quickly.
Its directors resigned.
Its personnel were withdrawn.
Its influence disappeared.
The Russian state transferred the project into a replacement company.
But ownership rights, compensation rights, LNG-contract disputes and alleged gas-payment liabilities survived.
The 94.8 billion-rouble figure became the thread connecting all of them.
First it was an exit valuation.
Then it was Novatek’s purchase price.
Then Gazprom’s.
Then a compensation pool.
Now Russia wants to use that same pool against Shell in litigation.
A neat corporate exit never occurred.
What occurred was a transfer of control followed by years of legal aftershocks.
Source Record
The principal Russian-government action in 2023 is Order No. 890-r of 11 April 2023, approving Novatek Moscow Region LLC as purchaser of the 27.49999998621683% interest for 94.8 billion roubles. Interfax reproduced the operative terms and recorded publication through Russia’s official legal-information portal. (Interfax)
Interfax — Russian government approves Novatek purchase, 12 April 2023
Shell CFO Sinead Gorman’s May 2023 statement provides the clearest contemporaneous Shell response: no payment had been received and Shell retained its legal rights. (Interfax)
Interfax — Shell says no Sakhalin payment received, 4 May 2023
The principal 2024 Russian action is Order No. 701-r of 23 March 2024, replacing Novatek with Gazprom-controlled Sakhalin Project LLC at the same 94.8 billion-rouble price. (Interfax)
Interfax — Gazprom replaces Novatek as buyer, 25 March 2024
Reuters contemporaneously reported the Gazprom transaction and Shell’s continued reservation of legal rights. (BOE Report)
Reuters report — Gazprom acquisition of former Shell allocation
Shell’s latest authenticated position is contained in its 2025 Annual Report and Accounts and SEC reporting, which describe the continuing Moscow litigation, the approximately €1.5 billion alleged gas debt and the attempt to access approximately 94 billion roubles held for Sakhalin compensation. (Shell)
Shell Annual Report and Accounts 2025
SEC — Shell Russia contingency disclosure
Archive disclaimer: This instalment distinguishes between Shell’s original interest in the Bermuda-incorporated Sakhalin Energy Investment Company, the unclaimed interest in the replacement Russian operator, and the Russian-government mechanism used to dispose of that interest. Russian prosecutorial claims are identified as allegations and are not presented as findings of liability. No inference of unlawful expropriation, unfair valuation or legal entitlement to compensation is made beyond what the cited documents establish.
Site-wide disclaimer applies.
Next instalment
The Sakhalin Papers LII: The Type-C Account — €1.5 Billion in Gas Claims, 94 Billion Roubles in Compensation and the Moscow Lawsuit Shell Cannot Yet Close
The 94.8 billion-rouble exit price did not end the Sakhalin story.
It became part of another dispute.
In October 2024, the Russian Prosecutor General sued eight Shell-group entities.
The claim reaches beyond Sakhalin ownership itself.
Russia alleges that Shell Energy Europe failed to pay approximately €1.5 billion for gas delivered in 2022.
It also seeks access to the 94 billion roubles purportedly reserved as Sakhalin equity compensation so that those funds can be applied against the alleged debt. (Shell)
Shell says the outcome remains highly uncertain.
The next file follows the litigation itself:
What is Russia alleging, how did an LNG supply dispute become tied to Shell’s Sakhalin compensation, what has happened inside the Moscow court, and why does Shell still say it cannot reliably estimate what — if anything — it may ultimately have to pay?
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