SLF-2007-102
The Sakhalin Papers XCII: The Russian Exit — Shell’s 28 February 2022 Announcement and the Financial Reckoning
Four days after Russia launched its full-scale invasion of Ukraine, Shell announced that it would withdraw from its major Russian joint ventures and end its involvement in Nord Stream 2. The decision brought an extraordinary chapter in the company’s history towards its conclusion. The financial consequences were immediate: a $1.614 billion impairment relating to Sakhalin II, a $1.126 billion write-down of its Nord Stream 2 loan and billions more in Russia-related charges. Yet Shell’s subsequent accounts reveal that the withdrawal was neither instantaneous nor complete. The original corporate announcements, SEC filings and contemporaneous reporting establish precisely what happened — and why the consequences remained unresolved years later.
Archive reference: SLF-2007-102
Publication date: 29 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-101, The Sakhalin Papers XCI, 28 October 2026
Principal authenticated records: Shell plc announcement of 28 February 2022; Shell’s Nord Stream 2 financing announcement of 24 April 2017; Shell’s operational update of 7 April 2022; first-quarter financial results of 5 May 2022; Shell Annual Report and Form 20-F 2022; Shell Annual Report and Form 20-F 2025, filed with the US Securities and Exchange Commission on 12 March 2026.
Contemporaneous reporting: Reuters, February–April 2022; Interfax, 5 May 2022; contemporary financial reporting on Shell’s Russian withdrawal and subsequent impairment charges.
Related legal record: The Russian restructuring of Sakhalin II under Presidential Decree No. 416 of 30 June 2022; subsequent Moscow proceedings identified as Case No. A40-241354/2024.
Evidence classification: Authenticated Shell corporate announcements, contemporaneous financial disclosures, SEC filings, independent reporting, official Russian measures and separately identified editorial commentary. Corporate intentions are distinguished from completed transactions. Financial impairments are distinguished from cash payments. Pending legal allegations are not presented as judicial findings.
Introduction: Four days that ended decades of commercial ambition
On 24 February 2022, Russian armed forces launched their full-scale invasion of Ukraine.
Four days later, Shell made an announcement that would have been almost unimaginable during the earlier years of its partnership with Gazprom.
The company declared that it intended to withdraw from its Russian joint ventures.
Its decision encompassed Sakhalin II, Salym Petroleum Development and the Gydan exploration venture.
Shell also announced that it intended to end its involvement in Nord Stream 2.
The implications extended beyond the abandonment of individual investments.
Shell had spent decades developing commercial relationships with Russia.
Sakhalin II had been one of its most ambitious international projects.
Nord Stream 2 represented another major commitment to the future of Russian natural gas supplies.
Now both were being brought to an end from Shell’s perspective.
But there is a documentary distinction that matters.
On 28 February 2022, Shell announced an intention to withdraw. It did not announce that every Russian investment had already been sold, every contract terminated or every financial obligation extinguished.
That distinction becomes central to understanding the financial and legal consequences that followed.
The original announcement survives in Shell’s corporate records.
It was also reproduced contemporaneously by RoyalDutchShellPlc.com.
The documents allow us to reconstruct the company’s position without relying upon retrospective interpretations.
Primary sources: Shell’s original announcement, 28 February 2022 and RoyalDutchShellPlc.com’s contemporary publication.
1. The original announcement: Shell makes its decision
The announcement was issued by Shell plc on 28 February 2022.
It identified the company’s principal Russian interests and confirmed that the Board intended to withdraw from its partnerships involving Gazprom and related entities.
The company’s chief executive, Ben van Beurden, condemned the Russian invasion.
He described the military aggression as senseless and said that Shell was shocked by the resulting loss of life in Ukraine.
Van Beurden declared:
“Our decision to exit is one we take with conviction.”
He also emphasised Shell’s immediate concern for the safety of its personnel in Ukraine and Russia.
The announcement recognised the importance of maintaining secure energy supplies to European and other markets.
It acknowledged that Shell would need to work through the commercial implications in discussions with governments and in accordance with applicable sanctions.
These qualifications were significant.
Shell was making a political and commercial decision in response to an extraordinary international crisis.
But the company was also acknowledging that implementation would involve complex questions concerning energy supplies, investment rights and contractual obligations.
The distinction between making the decision and completing the withdrawal was present from the beginning.
That is apparent from the language of Shell’s own announcement. GlobeNewswire
2. What Shell was actually leaving
The four principal investments identified in the announcement were not legally or financially identical.
Understanding their different structures is essential to understanding the subsequent losses.
Sakhalin II
Shell held a 27.5% interest in the Sakhalin II oil and liquefied natural gas development.
The other shareholders were Gazprom, Mitsui and Mitsubishi.
Gazprom held the controlling interest, acquired through the transaction negotiated in December 2006 and completed in April 2007.
Shell remained a substantial minority shareholder and continued to contribute technical expertise.
The investment was therefore an equity participation in an operating energy development.
Salym Petroleum Development
Shell held a 50% interest in Salym Petroleum Development, operating with Gazprom Neft in western Siberia.
This was a producing oil venture rather than an LNG export development.
It had its own assets, operating arrangements and accounting treatment.
Gydan
Shell held a 50% interest in the Gydan exploration venture with Gazprom Neft.
Unlike Sakhalin II and Salym, Gydan was still at the exploration stage.
Shell’s February announcement expressly stated that the venture had no production.
Nord Stream 2
This was fundamentally different.
Shell was not an equity shareholder in Nord Stream 2 AG under the financing arrangements established in April 2017.
Gazprom remained the sole shareholder.
Shell was one of five European energy companies that had agreed to provide financing and guarantees.
Its maximum commitment was approximately €950 million.
The five participants were Shell, ENGIE, OMV, Uniper and Wintershall.
Their combined commitments covered up to half of the project’s estimated €9.5 billion cost.
The distinction is crucial.
Shell’s Sakhalin II exposure was an equity investment. Its Nord Stream 2 exposure was principally a financing arrangement.
The subsequent impairments therefore reflected different financial assets and different accounting considerations.
Sources: Shell’s February 2022 investment summary and Contemporaneous account of the April 2017 Nord Stream 2 financing agreement. Ocean News & Technology
3. The financial position before the exit
Shell’s 28 February announcement contained two figures that deserve particular attention.
At the end of 2021, the company reported approximately:
$3 billion in non-current assets associated with the Russian ventures identified in its announcement.
Shell also disclosed that its share of adjusted earnings from the Sakhalin Energy and Salym joint ventures during 2021 amounted to approximately:
$700 million.
Those figures demonstrate that the Russian investments were not merely historical interests awaiting disposal.
They were still contributing to Shell’s financial performance.
Sakhalin II was an established LNG producer.
Salym was producing oil.
Nord Stream 2 was intended to become an important additional route for Russian gas exports to Europe.
But the figures should not be confused.
The $3 billion represented a reported balance-sheet amount for non-current assets in the relevant Russian ventures.
The $700 million represented adjusted earnings attributable to Shell from two operating ventures during 2021.
Neither figure constituted the total market value of all Shell’s Russian commercial relationships.
Nor did either establish the amount that Shell would eventually lose.
The company’s subsequent financial charges included exposures extending beyond those non-current investments.
That helps explain why the eventual withdrawal-related charges exceeded the approximately $3 billion figure highlighted in February. GlobeNewswire
4. The historical question: How did Shell reach this point?
It would be misleading to portray Shell’s Russian exposure as a sudden development.
The relationship had accumulated over decades.
In December 2006, Shell and its Japanese partners agreed that Gazprom would acquire control of Sakhalin Energy.
The agreement followed months of environmental controversy, regulatory pressure and negotiations concerning the project’s costs and ownership.
Shell retained a substantial minority stake.
The transaction was worth approximately $7.45 billion.
The earlier instalments of The Sakhalin Papers have examined the circumstances surrounding that agreement in considerable detail.
They have also examined the internal Shell correspondence disclosed during the Sakhalin controversy and the subsequent involvement of Russian environmental regulator Oleg Mitvol.
Those documents establish a complicated history.
They do not establish that the 2006 transaction was legally invalid.
Nor do they prove that the leaked correspondence caused Gazprom to obtain control.
But they demonstrate that Shell’s relationship with Russian state-controlled energy interests had already encountered serious political and regulatory difficulties.
The Nord Stream 2 relationship developed against another background of controversy.
Poland objected to the project’s proposed ownership arrangements.
The original structure was replaced by financing agreements.
European legislation subsequently changed.
American sanctions disrupted construction.
Ukraine repeatedly expressed concern about the strategic consequences of additional Russian gas transportation routes bypassing its territory.
Germany’s certification process became increasingly complicated.
By February 2022, Shell had invested financially in a completed pipeline that was still unable to begin commercial operations.
These developments were documented before Russia’s full-scale invasion.
The invasion dramatically transformed the circumstances, but it did not create every underlying political and commercial risk from nothing.
The relevant distinction is between risks that were identifiable beforehand and the precise consequences that could reasonably have been predicted.
The surviving public documents do not establish Shell’s complete internal assessment of those risks.
They do establish that the controversies were already visible.
See The Sakhalin Papers XCI — 28 October 2026 and The Sakhalin Papers LXXVI — The Nord Stream 2 Financing Arrangement.
5. April 2022: The first financial warning
On 7 April 2022, Shell issued a trading and operational update ahead of its first-quarter results.
The announcement included a warning about the financial consequences of withdrawing from Russia.
Shell estimated that impairments and additional charges relating to its Russian activities could amount to:
$4 billion to $5 billion
The estimate was expressed on a post-tax basis.
It included possible impairments of non-current assets and additional charges arising from matters such as receivables, credit losses and onerous contracts.
This was a broader assessment than the approximately $3 billion balance-sheet figure disclosed in February.
The announcement also explained an important accounting distinction.
The anticipated charges would be treated as identified items and excluded from the company’s adjusted earnings measure.
That meant that Shell could report strong adjusted earnings while simultaneously recognising substantial Russia-related losses in its statutory financial statements.
The market circumstances made that possibility especially significant.
Oil and gas prices had risen sharply.
Shell’s trading businesses were operating in unusually volatile conditions.
The financial impact of abandoning Russian investments was therefore occurring alongside favourable developments elsewhere in the company’s global portfolio.
This was not necessarily contradictory.
It reflected the structure of a large international energy business, with different activities exposed to different financial consequences.
Authenticated source: Shell — First Quarter 2022 Update Note, 7 April 2022.
6. May 2022: The audited accounting trail begins to emerge
On 5 May 2022, Shell published its unaudited first-quarter results.
The figures provided the first detailed accounting breakdown of the Russian withdrawal.
Shell reported pre-tax charges of:
$4.235 billion
The corresponding post-tax charge was:
$3.894 billion
The results identified the principal components.
The Sakhalin II impairment amounted to $1.614 billion.
The Nord Stream 2 loan write-down amounted to $1.126 billion.
Further impairments and charges related to Salym, Gydan, Russian marketing operations, trading contracts and other assets.
The significance of the document is not simply the size of the loss.
It demonstrates that Shell was dealing with several different forms of exposure simultaneously.
Some involved investments in producing assets.
Some involved a loan.
Others involved leases, receivables, marketing operations and contractual commitments.
The company had not simply written a cheque for $3.894 billion.
Much of the charge reflected reductions in the accounting values of assets and other recognition of losses.
Impairment charges are not necessarily equivalent to immediate cash expenditure.
This matters when assessing the economic cost of the decision. Shell Plc
7. Sakhalin II: The $1.614 billion impairment
The Sakhalin II charge deserves separate examination because it concerns the investment at the centre of this documentary series.
Shell’s first-quarter accounts recorded an impairment of:
$1.614 billion
The company explained how it had assessed the recoverable value of its interest.
The calculation was based upon risk-adjusted dividends declared in relation to Sakhalin Energy’s 2021 results.
The first part of those dividends was received in April 2022.
This is a revealing accounting detail.
Shell was no longer valuing its Sakhalin investment as though it would continue to participate normally in the project’s future profits.
Instead, the recoverable amount was being assessed in the context of withdrawal and the cash distributions that might still be obtained.
Another significant development followed.
From 1 April 2022, Shell considered that it had lost significant influence over Sakhalin Energy.
The company identified the resignation of its executive directors and the withdrawal of managerial and technical personnel as the reasons.
That resulted in a change in accounting classification.
The investment was no longer treated as an associate under the equity method.
It became a financial asset measured at fair value.
Shell specified that the reclassification itself had no immediate financial impact.
The distinction is important.
The impairment, the loss of significant influence and the later restructuring of the project were separate accounting and corporate events.
They should not be collapsed into a single supposed sale. SEC
8. Nord Stream 2: The $1.126 billion loan disappears from the balance sheet
The second major charge concerned Nord Stream 2.
Shell’s accounts recorded a complete write-down of its outstanding loan:
$1.126 billion
This figure should be understood in the context of Shell’s original financing agreement.
On 24 April 2017, the company committed to provide financing and guarantees of up to approximately €950 million.
The arrangement did not make Shell a shareholder in Nord Stream 2 AG.
It made Shell a financier.
The original agreement distinguished between an initial long-term funding facility and further financing or guarantees available according to the project’s requirements.
Shell’s 2022 annual report subsequently confirmed that its final loan instalments had been made during the second quarter of 2020.
That date matters.
By then, the project had already encountered substantial regulatory and political difficulties.
American sanctions had disrupted construction.
European gas legislation had changed.
Legal proceedings concerning the pipeline’s regulatory treatment were continuing.
Shell nevertheless completed its financing contributions under the arrangements then applicable.
Following the events of February 2022, the company reassessed the recoverability of the loan.
It concluded that the full outstanding amount should be written down.
A write-down does not necessarily mean that the underlying legal debt has been extinguished.
It means that the company has recognised the relevant reduction in the asset’s accounting value.
The documentary record therefore establishes a financial loss recognised by Shell.
It does not, by itself, establish that every potential contractual recovery right was legally cancelled.
Authenticated sources: Shell’s 2022 first-quarter results and the SEC-hosted 2022 annual-report note on withdrawal from Russia.
9. The other Russian ventures: More than Sakhalin and Nord Stream 2
The first-quarter accounts also recorded impairments relating to Shell’s other Russian operations.
Salym Petroleum Development incurred an impairment of approximately $233 million.
Gydan incurred an impairment of approximately $153 million, together with additional charges.
Shell’s Russian marketing business incurred substantial charges relating to non-current assets and other obligations.
These included the company’s service-station network and lubricants activities.
Other charges concerned contractual exposures and rights-of-use assets.
Together, these items help explain why Shell’s withdrawal-related charges extended beyond its two most prominent Russian investments.
They also demonstrate that the February announcement affected a range of operating activities.
Sakhalin II was a mature LNG development.
Salym was an operating oil business.
Gydan was an exploration venture.
Nord Stream 2 was a pipeline-financing exposure.
Shell’s retail and lubricants operations were another category entirely.
Different exit mechanisms were therefore required.
Some operations could be sold.
Others required withdrawal from management.
Some contractual relationships had to be wound down.
Still others became entangled in Russian legislation introduced after the invasion.
The financial statement does not support treating all these exposures as interchangeable. Shell Plc
10. The final 2022 figure: $4.170 billion before tax
There is an important difference between Shell’s first-quarter charges and its final reported position for 2022.
The first-quarter results recorded:
$4.235 billion before tax and $3.894 billion after tax.
The full-year accounts subsequently recorded net charges of:
$4.170 billion before tax
The corresponding full-year post-tax amount was:
$3.804 billion
These are the figures reported in Shell’s 2022 annual accounts.
The difference reflects subsequent accounting movements during the year.
The first-quarter and full-year charges should not be added together.
The annual figure represents the net withdrawal-related charges recognised for 2022.
It incorporates the effects recorded during the year, including later adjustments.
The full-year note allocates the charges across several income-statement categories.
It records $1.614 billion under the share of profits and losses of joint ventures and associates.
It records $1.116 billion under interest and other income or expenses.
It also records charges in revenue, depreciation and amortisation, administrative expenses and other categories.
The full-year amount in the interest category should not be confused with the original $1.126 billion Nord Stream 2 loan write-down.
The latter is the amount specifically identified in Shell’s first-quarter disclosure.
The full-year income-statement line reflects the net balance of relevant items recorded in that category.
This distinction is essential for an accurate financial chronology.
The authenticated full-year figures establish the scale of Shell’s recognised Russia-related losses.
They do not establish that the entire amount was attributable to Sakhalin II, Nord Stream 2 or any single Russian operation.
Primary accounting source: US Securities and Exchange Commission — Shell’s 2022 Russia Withdrawal Disclosures.
11. The apparent paradox: Billions written off while profits surged
Shell’s first-quarter 2022 results contained another striking figure.
Adjusted earnings reached:
$9.130 billion
This was a substantial increase from the previous quarter.
The company attributed the improvement primarily to higher realised energy prices, stronger trading contributions and other favourable financial developments.
The same results included the approximately $3.9 billion post-tax charge associated with withdrawing from Russia.
At first sight, the two figures appear difficult to reconcile.
But they measure different aspects of financial performance.
Adjusted earnings exclude certain identified items.
The Russian withdrawal charges were classified among those items.
Shell’s statutory income attributable to shareholders was approximately $7.116 billion for the quarter.
It would therefore be misleading to suggest that the Russia-related losses eliminated Shell’s profitability.
It would be equally misleading to suggest that strong adjusted earnings meant the Russian losses were insignificant.
Both figures were relevant.
The company was recognising substantial losses from particular investments while generating considerable profits from its remaining global operations.
The same quarter’s results showed operating cash flow of approximately $14.8 billion.
Shell also continued its shareholder-distribution programme.
In its February announcement, the company had reiterated an $8.5 billion share buyback programme for the first half of 2022.
The financial consequences of withdrawal were therefore significant but did not prevent Shell from maintaining substantial shareholder distributions.
That is an important distinction for investors examining the company’s capital allocation and risk management. Shell Plc
12. The exit was not instantaneous
Shell’s subsequent annual report provides a clearer picture of how the withdrawal unfolded.
On 1 April 2022, Shell recorded the loss of significant influence over Sakhalin Energy.
On 30 June, Russia issued Presidential Decree No. 416.
The decree required the transfer of Sakhalin Energy Investment Company Ltd’s project rights and obligations to a newly created Russian company.
Shell’s accounts later stated that the relevant transfers purportedly occurred on 17 August 2022.
On 1 September, Shell formally advised the Russian authorities that it would not apply for shares in the replacement company.
It also objected to the transfers and reserved its rights and remedies.
This was not an ordinary negotiated divestment in which Shell identified a purchaser, agreed a price and completed the transaction on conventional commercial terms.
The original decision to leave was Shell’s.
The subsequent restructuring was imposed through Russian presidential action.
The company’s refusal to participate in the replacement structure was another distinct decision.
Shell’s annual report recorded the carrying value of its Sakhalin II investment as zero at 31 December 2022.
Yet Shell continued to hold shares in the original Bermuda-incorporated Sakhalin Energy Investment Company.
The legal and financial consequences were therefore more complicated than the simple statement that Shell had left Russia.
These events were examined separately in our September 2026 Sakhalin investigations.
Their relevance here is that they demonstrate the practical consequences of the February announcement.
Announcing withdrawal was an event. Completing the disentanglement was a prolonged process. SEC
13. The legal aftermath: Russia’s 2024 claim
The consequences did not end with the 2022 financial statements.
On 2 October 2024, Russia’s Prosecutor General filed proceedings in Moscow against eight Shell-group entities.
The proceedings are identified as:
Case No. A40-241354/2024.
Shell’s subsequent annual reporting describes allegations relating to its withdrawal from Sakhalin Energy Investment Company.
The Russian prosecutor also seeks approximately €1.5 billion from Shell Energy Europe Limited for alleged unpaid gas deliveries during 2022.
A further element concerns approximately 94 billion roubles said to have been reserved for Shell as compensation associated with its former Sakhalin interest.
The prosecutor seeks to have those funds applied against part of the alleged gas debt.
These are separate commercial relationships that became entangled in the Russian proceedings.
One concerns Sakhalin equity.
Another concerns a gas-supply relationship involving Gazprom Export and Shell Energy Europe.
They should not be mistaken for the same transaction.
Most importantly, the Russian allegations are contested.
Shell’s latest annual report available for this review — covering 2025 and filed with the SEC on 12 March 2026 — states that the proceedings remain ongoing.
The company says it cannot reliably estimate the amount or timing of any eventual payment obligation.
The existence of the proceedings does not establish Shell’s liability.
Nor does it establish that Russia’s proposed use of the Sakhalin compensation is legally justified.
The case nevertheless illustrates the extraordinary legal complexity of Shell’s withdrawal.
More than four years after the February 2022 announcement, the company’s historical Russian relationships continued to feature in litigation and financial disclosures.
Authenticated record: Shell’s 2025 Form 20-F, filed 12 March 2026. The Russia litigation disclosure is reproduced in the SEC-hosted filing note.
14. The difficult question of commercial responsibility
The decision to leave Russia followed circumstances of exceptional gravity.
Shell’s position was that Russia’s invasion of Ukraine made continued participation in the identified ventures unacceptable.
Its chief executive publicly condemned the aggression.
The company also had responsibilities to employees, customers and shareholders.
But for a documentary history, the question of why Shell eventually withdrew must be separated from the question of how the company managed its exposure beforehand.
The Sakhalin II investment had survived the political and regulatory confrontation of 2006.
Shell had subsequently continued working with Gazprom.
Nord Stream 2 was financed despite substantial controversy over its geopolitical consequences.
The pipeline’s construction proceeded while European and American objections intensified.
These are established elements of the historical record.
They raise legitimate questions about corporate risk assessment.
How did Shell evaluate the possibility of a major deterioration in relations between Russia and the West?
What weight did it give to warnings concerning Russian state influence over strategic energy infrastructure?
How did it assess the potential consequences of sanctions?
What assumptions supported the recoverability of its Nord Stream 2 financing?
And what contingency arrangements existed for withdrawing from an operating venture such as Sakhalin II?
These are reasonable questions for shareholders.
But the publicly available documents examined for this instalment do not establish the complete deliberations of Shell’s Board.
They do not disclose every internal risk assessment.
They do not establish that the company’s directors anticipated the full-scale invasion.
Nor do they justify an allegation that Shell knowingly accepted certain financial losses in advance.
The evidence supports scrutiny of the decisions.
It does not establish improper motives.
15. An overlooked detail: Shell’s announcement already contained the limits of the withdrawal
The February announcement concerned equity partnerships and Nord Stream 2.
It did not initially constitute an unconditional promise to cease every commercial purchase of Russian oil and gas immediately.
That distinction became important within days.
On 4 March 2022, Shell purchased a cargo of Russian crude oil.
Reuters subsequently reported that the cargo had been bought at a substantial discount.
The purchase attracted criticism, including from Ukraine’s foreign minister.
Shell initially defended the decision by referring to the need to maintain supplies of essential petroleum products.
On 8 March, the company issued a broader announcement.
It committed to ending spot purchases of Russian crude oil and outlined a phased withdrawal from other Russian hydrocarbons.
Ben van Beurden apologised for the earlier cargo purchase.
This was another significant stage in Shell’s response.
It demonstrated the difference between withdrawing from Russian equity investments and disengaging from the country’s wider oil and gas trade.
The two actions involved different commercial, contractual and logistical questions.
The March controversy also provides a revealing test of the public language used in February.
Shell had declared its decision to exit with conviction.
Days later, it was defending a Russian crude purchase as necessary for energy security.
The company subsequently acknowledged that the purchase had been a mistake.
That sequence is documented.
Whether the original decision was commercially justified is a separate question.
The detailed evidence deserves its own instalment.
Sources: Reuters — Shell’s Russian crude purchase and humanitarian fund, 5 March 2022 and Shell’s formal apology and expanded withdrawal announcement, 8 March 2022.
DOCUMENTARY FINDINGS
Established facts
Shell announced its intention to withdraw from major Russian ventures and Nord Stream 2 on 28 February 2022.
The announcement followed Russia’s full-scale invasion of Ukraine on 24 February.
Shell held a 27.5% interest in Sakhalin II, a 50% interest in Salym Petroleum Development and a 50% interest in the Gydan venture.
Shell was a financier of Nord Stream 2, not an equity shareholder in Nord Stream 2 AG under the 2017 financing arrangement.
At the end of 2021, Shell reported approximately $3 billion in non-current assets associated with the Russian ventures identified in its February announcement.
The company reported approximately $700 million in adjusted earnings attributable to it from the Sakhalin Energy and Salym joint ventures during 2021.
Shell’s first-quarter 2022 accounts recorded a $1.614 billion impairment relating to Sakhalin II.
They also recorded a $1.126 billion write-down of the Nord Stream 2 loan.
Total first-quarter withdrawal-related charges were $4.235 billion before tax and $3.894 billion after tax.
The final 2022 accounts recorded net withdrawal-related charges of $4.170 billion before tax and $3.804 billion after tax.
Shell lost significant influence over Sakhalin Energy from 1 April 2022 following the resignation of its executive directors and withdrawal of managerial and technical personnel.
Russia subsequently transferred the project’s operating arrangements to a newly created Russian entity under Presidential Decree No. 416.
Shell declined to participate in that replacement company.
The company’s 2025 annual report, filed in March 2026, continued to identify unresolved Russian litigation arising from the wider consequences of its withdrawal.
Important distinctions
The February 2022 announcement was an intention to withdraw, not confirmation of an immediately completed sale.
The Sakhalin II impairment and Nord Stream 2 loan write-down concerned different forms of investment.
The financial charges were not all immediate cash expenditures.
The first-quarter and full-year withdrawal charges are not separate amounts to be added together.
Shell’s adjusted earnings excluded the identified Russia-related charges.
The Russian presidential restructuring was not a court judgment determining that Shell had acted unlawfully.
The subsequent Russian prosecutor’s allegations remain contested and are not treated as established liabilities.
Not established
The documents examined do not establish that Shell’s directors knew Russia would launch a full-scale invasion in February 2022.
They do not establish that Shell concealed internal assessments predicting the precise consequences of such an invasion.
They do not prove that the Nord Stream 2 financing arrangement was unlawful.
They do not establish that Shell’s 2022 decision extinguished every contractual or ownership right associated with its former Russian investments.
They do not establish that Shell will ultimately be liable for the sums claimed in the subsequent Moscow litigation.
EDITORIAL COMMENTARY
The Russian exit was a financial reckoning with decisions made over many years
The February 2022 announcement can be understood as a response to an extraordinary geopolitical event.
Shell’s decision followed the invasion of Ukraine.
The company condemned Russia’s actions.
It announced that it would withdraw from major partnerships involving Gazprom.
Those facts are clear.
But the significance of the decision extends beyond the circumstances of February 2022.
The Sakhalin and Nord Stream 2 investments had been developed over many years.
They reflected corporate assessments concerning access to energy resources, future demand, international partnerships and the commercial importance of Russian supplies.
Those decisions were made in a world in which governments and multinational companies continued to maintain substantial commercial relationships with Russia despite repeated political controversies.
Shell was not alone.
Other major European energy companies had also invested in Russian ventures or committed financing to Nord Stream 2.
But that wider participation does not eliminate Shell’s responsibility for its own investment decisions.
For shareholders, the key question is not simply whether Shell was right to withdraw after the invasion.
It is how the company assessed the risks of its commitments before that point.
The documentary record establishes that significant warning signs existed.
Sakhalin II had experienced a politically charged ownership confrontation.
Nord Stream 2 had become the subject of regulatory disputes, sanctions and objections from European governments.
Those events did not make a full-scale invasion inevitable.
But they formed part of the environment in which Shell continued to operate.
The financial consequences ultimately recognised in 2022 demonstrate the scale of the exposure.
They also expose the limitations of a simple narrative in which Shell made a clean break with Russia on 28 February.
The actual sequence was considerably more complex.
The company announced its intention to leave.
It impaired investments.
It withdrew management personnel.
It abandoned participation in certain operating arrangements.
Russia restructured assets.
Trading and contractual relationships continued in modified forms.
Some were terminated.
Others generated disputes.
And years later, the legal consequences had still not been fully resolved.
The financial statements are the most important witnesses
Shell’s original announcement explains why the company said it was leaving.
The subsequent accounts explain what leaving cost.
The two records should be read together.
The February statement is a declaration of corporate intention.
The May results quantify the initial financial consequences.
The annual accounts document the subsequent adjustments.
The later SEC disclosures reveal the continuing legal consequences.
Taken together, they provide a more reliable historical account than any single headline.
The documentary conclusion is straightforward: Shell’s departure from Russia was announced in February 2022, but its financial and legal consequences extended far beyond that announcement.
The Sakhalin Papers have followed Shell’s Russian relationships from the struggle for control of a major energy development to their partial unwinding after a war.
The next question concerns what happened when Shell’s stated determination to withdraw encountered the immediate demands of the international oil market.
And that brings us to one of the most controversial transactions of March 2022.
SOURCE RECORD
1. Shell plc — Original Russian Withdrawal Announcement, 28 February 2022
The principal authenticated corporate document for this instalment. It identifies the ventures Shell intended to leave, records Ben van Beurden’s explanation and discloses the company’s Russian non-current assets and 2021 joint-venture earnings.
Read Shell’s original announcement
2. RoyalDutchShellPlc.com — Contemporary Publication, 28 February 2022
The Donovan–Shell archive preserved Shell’s announcement on the day it was issued. This provides a useful contemporaneous reference showing that the withdrawal was documented by the website at the time, rather than reconstructed exclusively from later reporting.
Read the original archive publication
3. Nord Stream 2 Financing Agreement, 24 April 2017
The original financing arrangements established commitments by five European energy companies of up to approximately €950 million each. Gazprom remained sole shareholder of the pipeline company.
Contemporaneous account of Shell’s financing agreement
4. Shell plc — First Quarter 2022 Operational Update, 7 April 2022
Shell estimated post-tax Russia-related impairment and additional charges of $4 billion to $5 billion and explained their anticipated treatment as identified items excluded from adjusted earnings.
Read the original Shell update
5. Shell plc — First Quarter 2022 Results, 5 May 2022
The detailed contemporary financial disclosure records the $1.614 billion Sakhalin II impairment, the $1.126 billion Nord Stream 2 loan write-down and the overall first-quarter withdrawal-related charges.
Read the full first-quarter financial announcement
6. Interfax — Shell Writes Off $3.9 Billion in Russia-Exit Losses, 5 May 2022
Contemporaneous independent reporting summarising the company’s accounting disclosures and the main financial components of its withdrawal.
7. US Securities and Exchange Commission — Shell Annual Report and Form 20-F 2022
The principal authenticated full-year accounting record. It establishes the net 2022 withdrawal-related charges and details the consequences for Sakhalin II, Nord Stream 2 and other Russian interests.
Read the SEC filing’s Russia withdrawal note
8. Shell plc — Annual Report and Form 20-F 2025, filed 12 March 2026
Provides the subsequent authenticated corporate account of the unresolved Russian litigation, including the claim concerning approximately €1.5 billion in alleged unpaid gas deliveries and the proposed use of Sakhalin-related compensation funds.
Read the SEC filing information
9. Shell plc — Expanded Withdrawal Announcement, 8 March 2022
Records Shell’s apology for purchasing a Russian crude cargo and its decision to cease spot purchases and undertake a phased withdrawal from Russian hydrocarbons.
Read Shell’s statement of 8 March 2022
Archive disclaimer
This instalment relies principally upon authenticated Shell corporate disclosures, financial statements filed with the United States Securities and Exchange Commission, contemporaneous reporting and identified official Russian measures.
The original 28 February 2022 announcement is treated as evidence of Shell’s declared intention at that date, not as evidence that every affected transaction or contractual relationship had already been terminated.
Financial impairments are distinguished from cash payments and realised disposal proceeds.
The accounting treatment of Sakhalin II is distinguished from Shell’s financing exposure to Nord Stream 2.
The post-tax and pre-tax figures for the first quarter of 2022 are distinguished from the final reported figures for the full financial year.
No allegation is made that Shell violated sanctions through its original participation in Nord Stream 2.
No allegation is made that Shell’s directors possessed advance knowledge of Russia’s February 2022 invasion.
The subsequent Russian litigation is identified as contested proceedings. Allegations made by the Russian prosecutor are not treated as established legal findings.
The article does not characterise Shell’s Russian withdrawal as a single completed sale, nor does it assume that the recognised accounting losses extinguished every associated legal right.
Editorial commentary concerning corporate risk management is separately identified and does not represent a judicial or regulatory determination of misconduct.
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NEXT IN THE SHELL LEAKS FILES
SLF-2007-103 — The Sakhalin Papers XCIII: The Discounted Cargo — Shell’s Russian Oil Purchase, the Ukrainian Protest and the Apology That Followed
On 28 February 2022, Ben van Beurden announced that Shell intended to withdraw from its partnerships with Gazprom.
He declared that Shell was acting with conviction.
Four days later, on 4 March, the company purchased a cargo of Russian crude oil.
According to contemporaneous Reuters reporting, the cargo was acquired at a substantial discount.
The purchase attracted immediate criticism.
Ukraine’s foreign minister, Dmytro Kuleba, publicly challenged the company.
Shell initially explained its decision by referring to Europe’s need for secure supplies of petroleum products.
It subsequently promised to direct profits associated with the limited remaining Russian oil it would process towards humanitarian assistance for Ukraine.
Then, on 8 March, Shell issued an apology.
The company’s chief executive acknowledged that the purchase had been wrong.
Shell also announced a much broader programme for withdrawing from Russian oil, petroleum products, pipeline gas and LNG.
The documentary questions are unavoidable.
Why did Shell purchase Russian crude after announcing its intention to leave its major Russian partnerships?
What commercial circumstances led to the decision?
What did Shell say at the time?
What did the Ukrainian government say?
Was the purchase prohibited by sanctions?
And what changed between Shell’s initial defence of the transaction and its subsequent apology?
The next instalment will reconstruct those events using Shell’s original statements, Reuters reporting, contemporary government reactions and the company’s subsequent financial disclosures.
It will distinguish the legality of the transaction from the ethical controversy surrounding it.
The question is not whether Shell eventually apologised.
That is established.
The question is how a company that had publicly committed itself to withdrawing from major Russian partnerships came to purchase Russian crude only days later — and what the documentary record reveals about the decision.
The Sakhalin Papers continue.
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