THE SHELL LEAKS FILES — 4 NOVEMBER 2026
Archive reference: SLF-2007-108
The Sakhalin Papers XCVIII: The Account That Could Not Pay — Shell’s 94.8 Billion Roubles and Russia’s Compensation Dispute
AN INDEPENDENT DOCUMENTARY INVESTIGATION
By the Donovan–Shell Archive
Researched and drafted with the assistance of ChatGPT, using authenticated Shell financial disclosures, Russian government legal instruments, contemporaneous reporting and available records of proceedings before the Moscow Arbitration Court.
Russia assigned a value of 94.8 billion roubles to Shell’s former interest in the Sakhalin II project. It approved a buyer, changed that buyer, and ultimately transferred the corresponding interest in the replacement Russian operating company to a Gazprom subsidiary. But Shell did not simply receive the money. The explanation lies partly in the original presidential decree of June 2022, which expressly restricted access to sale proceeds pending government-controlled investigations. The financial dispute subsequently became entangled with an entirely separate claim concerning unpaid gas deliveries. Four years after Shell announced its withdrawal from Russia, the company’s own SEC disclosures still describe substantial uncertainty. An examination of the original legal instruments reveals that the restrictions on payment were not an unforeseen complication: they were built into the restructuring from the beginning.
Publication date: 4 November 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-107 — Thirty Days to Decide: Putin’s Decree, Japan’s Acceptance and Shell’s Refusal, 3 November 2026
Principal authenticated evidence: Russian Presidential Decree No. 416 of 30 June 2022; Russian Government Orders No. 890-r of 11 April 2023 and No. 701-r of 23 March 2024; Shell’s 2022 financial disclosures; Shell’s 2025 Form 20-F filed with the SEC on 12 March 2026; available records concerning Moscow Arbitration Court Case No. A40-241354/2024.
Evidence classification: Original corporate and regulatory disclosures; published Russian legal instruments; contemporaneous reporting; publicly identified court proceedings; and separately identified editorial analysis.
Introduction: A billion-dollar question
The previous instalment examined the restructuring of Sakhalin II following President Vladimir Putin’s intervention in June 2022.
Russia replaced the project’s Bermuda-registered operating company with a Russian limited liability company.
Foreign shareholders were required to decide whether to seek equivalent interests in the replacement entity.
Japan’s Mitsui and Mitsubishi accepted the arrangements.
Shell refused.
That decision created another question.
What would happen to Shell’s former 27.5% interest?
By April 2023, the Russian government had supplied an answer.
It approved the disposal of the corresponding interest in the new operating company for:
94.8 billion roubles.
At contemporary exchange rates, that represented approximately US$1 billion.
But a valuation is not a payment.
And a government-approved sale is not necessarily a transaction in which the original foreign investor receives unrestricted proceeds.
The distinction became crucial.
Russia’s original presidential decree had already established a mechanism governing how those proceeds would be handled.
The mechanism required the money to be placed in a special account.
It restricted the former shareholder’s ability to use it.
It also authorised investigations into alleged damage attributable to foreign participants.
The resulting financial arrangements were therefore considerably more complicated than the conventional sale of an investment.
The primary documents establish how those complications arose.
They also reveal why Shell’s withdrawal from Sakhalin II continues to have legal consequences.
1. The original decree contained the answer
The most important document in this investigation is Presidential Decree No. 416, signed by Vladimir Putin on 30 June 2022.
Its full title concerns special economic measures in the fuel and energy sector in response to actions by foreign governments and international organisations.
The decree established the restructuring of Sakhalin II.
It also prescribed what would happen when a foreign shareholder did not obtain an interest in the replacement operating company.
Several provisions are particularly important.
Subparagraph (h) of paragraph 1 provided for an unclaimed interest to be valued by the Russian government and sold to a qualifying Russian legal entity.
Subparagraph (i) addressed the sale proceeds.
It required the purchaser to credit those proceeds to a special Type-C account opened in the former shareholder’s name.
Crucially, it also restricted the shareholder’s ability to dispose of the money until specified procedures had been completed.
Those procedures were contained in the next three subparagraphs.
Subparagraph (k) provided for financial, environmental, technological and other audits of foreign persons and companies involved in the production-sharing agreement.
Subparagraph (l) authorised the Russian government to determine the amount of damage allegedly caused and identify persons responsible for compensation.
Subparagraph (m) provided for amounts corresponding to that damage to be deducted from the relevant Type-C account in favour of the replacement operating company.
The implications are substantial.
Under the Russian government’s own arrangements, selling an unclaimed interest did not necessarily result in immediately accessible proceeds for the former investor.
A process for examining alleged liabilities stood between the sale and unrestricted use of the money.
The restriction was not introduced after Shell’s interest had been valued. It formed part of the original restructuring decree.
That is the central documentary finding of this instalment.
Primary legal source: Russian Presidential Decree No. 416, 30 June 2022 — Reproduced Legal Text. RuLaws
2. A Type-C account is not an ordinary bank account
The distinction between a Type-C account and an unrestricted commercial bank account is important.
Russia introduced special accounts in 2022 as part of its response to sanctions and financial restrictions imposed following the invasion of Ukraine.
Presidential Decree No. 95 of 5 March 2022 established arrangements governing certain obligations to foreign creditors.
Decree No. 416 expressly incorporated that mechanism into the Sakhalin II restructuring.
The proceeds from an unclaimed interest were to be credited to a Type-C account in the name of the original shareholder.
That provision could create the appearance that compensation had been provided.
After all, a sum could be assigned to an identified account.
But the existence of an account is not equivalent to unrestricted ownership and control of the funds held within it.
The specific Sakhalin provisions imposed an additional restriction.
The shareholder could not dispose of the proceeds until the specified audit and compensation procedures had been completed.
This created a significant difference between three separate events.
A Russian government decision could establish the price of an interest.
The purchaser could transfer the purchase consideration into the required account.
But the former foreign shareholder might still be unable to withdraw or use the money freely.
The decree expressly contemplated that separation.
It would therefore be misleading to describe the approved purchase price as money Shell necessarily received.
That conclusion does not require speculation about Russian motives.
It follows from the published legal mechanism.
Nor does it establish that every restriction imposed under the decree would necessarily be enforceable under every potentially applicable international investment agreement.
The decree establishes Russia’s domestic procedure.
Questions concerning the wider legal consequences are separate matters.
3. April 2023: Novatek becomes the proposed purchaser
On 11 April 2023, Russian Prime Minister Mikhail Mishustin signed Government Order No. 890-r.
The order approved the disposal of the unclaimed interest in Sakhalin Energy LLC.
It identified the precise percentage concerned:
27.49999998621683%.
It established the price:
94.8 billion roubles.
And it designated Novatek Moscow Region LLC, a subsidiary of the Russian gas producer Novatek, as the purchaser.
The order was reported by Interfax and subsequently examined by the Japan External Trade Organization.
The degree of numerical precision in the legal instrument is notable.
The percentage corresponded to the interest that Shell would have been entitled to seek in the replacement Russian company.
It did not establish that Shell had voluntarily sold its shares in the original Bermuda company to Novatek.
That distinction must be preserved.
Russia was disposing of an unclaimed interest in the newly established Russian operating company.
Shell continued to assert rights associated with its existing investment.
The two positions were not necessarily consistent.
But they concerned different legal structures.
The Russian government had established a procedure for assigning ownership in the replacement company.
Shell had not agreed that the transfer of its original company’s rights and assets was legally effective in every applicable jurisdiction.
The resulting dispute could not be resolved merely by naming a purchaser.
Primary source: Russian Government Order No. 890-r, 11 April 2023.
Independent contemporary source: Japan External Trade Organization — Russia Approves Novatek Acquisition, 17 April 2023. Interfax.ru
4. Shell’s chief financial officer intervenes
The distinction between the reported sale and actual payment became apparent almost immediately.
On 4 May 2023, Shell Chief Financial Officer Sinead Gorman addressed questions concerning reports that the Sakhalin interest had been sold to Novatek.
Interfax recorded her response:
“No payments have been made and we retain our legal rights.”
The statement deserves attention.
Shell was not merely declining to confirm the price.
Nor was it simply refusing to discuss the transaction.
Its chief financial officer addressed two specific matters.
First, Shell had not received payment.
Second, the company continued to assert legal rights.
Those statements directly challenged any impression that the Russian government’s approval of Novatek as purchaser had completed an ordinary commercial disposal involving Shell.
The surrounding circumstances were unusual.
Russian financial reporting had discussed the possible effects of transferring approximately 95 billion roubles to Shell.
There had also been speculation concerning the conversion of the proceeds into foreign currency.
But the company’s own financial officer said payment had not occurred.
The difference between Russian government approval and Shell’s position was therefore publicly documented.
The statement did not establish what compensation might eventually become available.
It established that, as of 4 May 2023, Shell had not received the reported proceeds and was preserving its legal position.
Contemporaneous source: Interfax — Shell Has Not Received Funds for Sakhalin II Stake, 4 May 2023.
5. The buyer changes — but the price does not
Nearly a year later, the Russian government changed its decision.
On 23 March 2024, Prime Minister Mishustin signed Government Order No. 701-r.
This instrument is particularly significant because it expressly revoked the earlier Novatek order.
The replacement purchaser was:
Sakhalinsky Proekt LLC — Sakhalin Project LLC.
The company was associated with Gazprom.
The price remained unchanged.
94.8 billion roubles.
Government Order No. 701-r identified the same precise interest and approved its disposal to the Gazprom-controlled vehicle.
It also declared the April 2023 order ineffective.
This was a formal government decision, not merely a report that two commercial companies had privately agreed to substitute one purchaser for another.
Interfax reported the change on 25 March 2024.
The original Novatek arrangement had not progressed to completion.
The Russian government therefore approved a different buyer.
From Shell’s perspective, the important distinction remained.
The Russian authorities were determining how an interest in the replacement company would be disposed of.
Shell’s position concerning its original legal rights was not thereby resolved.
Nor did the substitution of Gazprom for Novatek establish that the purchase consideration had become freely accessible to Shell.
The special-account provisions remained relevant.
Primary source: Russian Government Order No. 701-r, 23 March 2024.
Contemporaneous source: Interfax — Gazprom Replaces Novatek as Buyer of Sakhalin Energy Interest, 25 March 2024. RuLaws
6. The transaction did not extinguish Shell’s original shareholding
A further complication emerges from Shell’s most recent annual reporting.
In its 2025 Form 20-F, filed with the US Securities and Exchange Commission on 12 March 2026, Shell disclosed that it still held a 27.5% minus one share interest in Sakhalin Energy Investment Company Ltd.
That was the original Bermuda-registered company.
Shell also stated that this company purportedly no longer held the licences, rights and obligations associated with Sakhalin II.
The wording is significant.
Shell continued to recognise its interest in the original legal entity.
But the Russian authorities had transferred the operating project into a replacement company.
The interest assigned by Russia to Gazprom’s vehicle was therefore not the same legal instrument as Shell’s original shareholding.
The distinction explains why both propositions could appear in the documentary record.
Gazprom’s vehicle could acquire the corresponding interest in the Russian replacement company.
At the same time, Shell could continue to hold shares in the predecessor Bermuda company.
That does not mean Shell continued to exercise operational control over Sakhalin II.
Nor does it mean the original shares necessarily retained the commercial value associated with the producing project.
It means that the legal consequences of the restructuring extended beyond a straightforward share transfer.
Shell’s corporate withdrawal and the extinction of every associated legal interest were not necessarily the same event.
That distinction remains important when examining compensation and potential remedies.
Primary source: Shell plc — 2025 Form 20-F, Russia Disclosure, Filed 12 March 2026. SEC
7. Shell had already written down the investment
The financial history adds another complication.
Shell’s withdrawal announcement followed Russia’s invasion of Ukraine in February 2022.
In the first quarter of that year, Shell recognised a $1.614 billion impairment against its Sakhalin II investment.
The company reported that it lost significant influence over the project from 1 April 2022.
Its executive directors had resigned from the project, and managerial and technical personnel were withdrawn.
Shell subsequently changed the accounting treatment of the investment.
Following further adjustments and receipt of dividends, the carrying value had fallen to zero by 30 September 2022.
It remained zero at the end of that year.
These figures must not be confused with the subsequent Russian sale price.
The $1.614 billion impairment represented an accounting adjustment associated with Shell’s reassessment of its investment.
The 94.8 billion-rouble price was established under the Russian government’s disposal arrangements.
They arose from different accounting and legal processes.
The fact that an investment has a zero carrying value does not automatically extinguish every legal claim concerning it.
Equally, a later government-approved purchase price does not establish that the original investor can recognise or collect an equivalent sum.
The figures must be considered separately.
Shell’s original disclosures explain the basis of its accounting treatment.
Primary source: Shell plc — Fourth Quarter and Full-Year 2022 Financial Disclosures, SEC. SEC
8. October 2024: Russia brings a different dispute into the picture
The compensation controversy acquired another dimension on 2 October 2024.
Russia’s Prosecutor General filed proceedings in the Moscow Arbitration Court against eight Shell-group entities.
The defendants included Shell plc and Shell Energy Europe Limited.
The case is identified as:
A40-241354/2024.
The proceedings were subsequently accepted by the court.
Publicly available legal records identify an order dated 11 October 2024.
The case was later placed behind closed doors because of confidentiality and commercial-secrecy concerns.
That restriction is important.
The complete statement of claim, contractual evidence and subsequent arguments have not been available for comprehensive independent examination.
The public record nevertheless establishes the existence of the proceedings.
Shell’s own financial disclosures provide the most authoritative accessible description of the principal remedies sought.
Court record: Prosecutor General’s Office of the Russian Federation v Shell plc and Others — Moscow Arbitration Court, Case A40-241354/2024.
Contemporaneous legal reporting: Pravo.ru — Russian Prosecutor Files Claim Against Shell, 4 October 2024. Jus Mundi
9. What Russia’s prosecutor is actually seeking
Shell’s 2025 Form 20-F contains a particularly revealing disclosure.
The company states that the Russian prosecutor seeks three principal forms of relief.
The first concerns Shell’s withdrawal from Sakhalin Energy Investment Company.
The prosecutor seeks declarations that Shell unlawfully withdrew support from the project company.
The second concerns a separate commercial relationship.
The prosecutor seeks approximately:
€1.5 billion
from Shell Energy Europe Limited for alleged unpaid gas deliveries in 2022.
The proposed beneficiary is Gazprom Export.
The third connects the two matters.
The prosecutor seeks a declaration allowing Gazprom Export to take approximately:
94 billion roubles
purportedly set aside for Shell as Sakhalin equity compensation in a Type-C account.
Those funds would then be applied against part of the alleged Shell Energy Europe debt.
That is the essential structure of the claim as described by Shell.
But the two financial amounts are not interchangeable.
The 94.8 billion roubles was the Russian government’s approved purchase price for the unclaimed interest.
The approximately 94 billion roubles identified in Shell’s disclosure concerns funds allegedly reserved in a Type-C account.
The approximately €1.5 billion relates to a disputed contractual gas-payment obligation.
The figures arise from different transactions.
The prosecutor’s proceedings seek to connect them.
That connection is the critical development.
What originated as a dispute over the consequences of Shell’s withdrawal from Sakhalin II became linked to an alleged liability arising from European pipeline-gas supplies.
Primary source: Shell plc — 2025 Form 20-F, Note 32: Legal Proceedings and Other Contingencies, Russia. SEC
10. The gas dispute did not originate at Sakhalin II
There is an important distinction concerning the underlying commercial relationship.
The €1.5 billion claim does not concern alleged non-payment for LNG produced at Sakhalin II.
It concerns gas supplied by Gazprom Export to Shell Energy Europe Limited.
The relevant dispute developed in 2022 following Russia’s introduction of new payment requirements for certain foreign purchasers of pipeline gas.
Presidential Decree No. 172, signed on 31 March 2022, established a mechanism involving payments through Gazprombank and conversion into roubles.
Shell Energy Europe did not accept the revised payment arrangement.
Gazprom subsequently announced that it was suspending supplies to Shell Energy Europe from 1 June 2022.
The contract reportedly involved up to 1.2 billion cubic metres of gas annually for delivery to Germany.
These events were documented contemporaneously.
They explain the commercial background to the later claim.
But they do not resolve the contractual dispute.
The publicly available record does not contain a complete set of the relevant contractual provisions and subsequent arguments.
It therefore cannot establish whether Russia’s revised payment mechanism was binding under the original agreement.
Nor can it establish whether Shell Energy Europe was liable for the amount subsequently claimed.
Those are disputed questions.
The significance for the Sakhalin investigation is that the Russian prosecutor seeks to apply funds associated with one commercial relationship against an alleged debt associated with another.
A gas-purchase dispute involving Shell Energy Europe became entangled with compensation associated with Shell’s former Sakhalin II investment.
That is materially different from suggesting that the disputed gas deliveries originated from Sakhalin II.
The distinction has been examined previously in the archive.
Related investigation: The Shell Leaks Files — 19 September 2026: The Type-C Account and the €1.5 Billion Claim. Royal Dutch Shell Plc .com
11. Two separate mechanisms for reducing the proceeds
The documents reveal a distinction that deserves particular attention.
The original Sakhalin restructuring decree and the later Russian prosecutor’s proceedings involve different mechanisms.
The first is contained in Presidential Decree No. 416.
It provides for audits concerning the implementation of the Sakhalin production-sharing agreement.
It also provides for deductions from the relevant Type-C account to compensate damage attributed to foreign participants.
The second arises from the subsequent Moscow litigation.
That case includes a claim concerning alleged unpaid gas deliveries under a separate commercial relationship.
The prosecutor seeks to use Sakhalin compensation funds against that alleged debt.
These are not identical claims.
The existence of one does not prove the validity of the other.
Nor does the original audit provision automatically establish that Gazprom Export is entitled to compensation for the disputed pipeline-gas deliveries.
The legal basis for the requested application of funds must be assessed separately.
This distinction is important because otherwise the story can be misleadingly simplified.
A reader might assume that the 94 billion roubles was withheld solely because of alleged environmental damage at Sakhalin II.
The published records do not support that conclusion.
The original decree established audit and damage-compensation provisions.
The later proceedings seek relief involving an entirely separate gas-payment dispute.
Both affect the potential availability of compensation.
But they arise through different legal pathways.
12. A closed courtroom and an unresolved claim
The litigation has continued for more than two years.
Shell’s 2024 Annual Report recorded that Shell Energy Europe filed a postponement motion in January 2025.
A hearing in February 2025 resulted in an adjournment.
Further hearings and postponements followed.
The proceedings continued during 2025.
Shell’s 2025 Annual Report, published on 12 March 2026, stated that the proceedings remained ongoing.
The company also emphasised uncertainty concerning any eventual financial obligations.
The available procedural reporting provides a more recent development.
On 8 July 2026, Interfax’s X-Compliance service reported that the Moscow Arbitration Court had scheduled the continuation of the case for:
18 January 2027.
The report cited the court’s case records.
It also confirmed that the proceedings were being conducted behind closed doors.
That limits the ability of an independent investigator to examine the underlying evidence.
The next scheduled hearing should not be confused with a judgment date.
Nor does the continuation of proceedings establish that either side’s legal position has been accepted.
No publicly verified final judgment resolving the claims has been identified in the material examined for this instalment.
As of 4 November 2026, the latest accessible procedural reporting therefore indicates that the litigation remains unresolved.
Source: X-Compliance/Interfax — Moscow Court to Continue Shell Proceedings on 18 January 2027, Reported 8 July 2026. X-Compliance
13. What Shell says about the financial uncertainty
The most recent authenticated annual disclosure is explicit about the uncertainty.
Shell’s 2025 Form 20-F states that the Russian prosecutor’s proceedings remain ongoing.
It identifies the three principal forms of relief sought.
It then explains that the company cannot reliably estimate the magnitude or timing of any possible obligation or payment.
Shell also states that it cannot determine whether any payment will ultimately be due.
The company identifies significant uncertainty concerning the outcome and potential effects on its future operations, earnings, cash flows and financial condition.
Those statements require careful interpretation.
They are not admissions of liability.
Nor are they assurances that Shell will ultimately recover the compensation.
They indicate that the outcome cannot presently be estimated reliably.
The disclosure also does not establish that every rouble associated with the Russian-approved purchase price is available for Shell’s unrestricted use.
On the contrary, the company describes the relevant funds as purportedly set aside in a Type-C account.
That wording reflects the unresolved nature of the arrangements.
It is therefore inappropriate to represent the Russian-approved sale price as a completed cash receipt by Shell.
Primary source: Shell plc — 2025 Annual Report, SEC Filing, Legal Proceedings and Contingencies. SEC
EDITORIAL COMMENTARY
A sale price without an ordinary sale
The Sakhalin II compensation dispute demonstrates the importance of distinguishing financial value from financial control.
Russia established a price.
It selected a purchaser.
It replaced that purchaser.
The corresponding interest in the replacement Russian operating company was subsequently acquired by a Gazprom-controlled entity.
But Shell’s legal and financial position was not resolved through those decisions.
The original presidential decree had already prescribed restrictions on the resulting proceeds.
The subsequent litigation created an additional potential claim against them.
The result is a striking example of the difficulties that can arise when a foreign investor loses operational influence over an asset but continues to possess disputed legal and financial interests.
The significance of the original Type-C provisions
The original decree is particularly revealing.
It did not merely require compensation to be placed in a special account.
It expressly restricted the former shareholder’s ability to use the money pending further procedures.
It also empowered the Russian government to investigate alleged damage and determine corresponding deductions.
That meant the valuation of an unclaimed interest was only one stage of the process.
For an international investor, the distinction is commercially significant.
A nominal valuation does not necessarily produce an equivalent financial benefit.
The ability to receive, transfer and use the proceeds matters.
So does the enforceability of the underlying legal rights.
The Russian measures placed those questions within a framework controlled by Russian state institutions.
Whether particular provisions could be challenged under applicable international law is a separate question.
The published documents do not establish the outcome of any such challenge.
Why the Gazprom Export claim matters
The later Russian lawsuit demonstrates another complication.
Shell’s former Sakhalin interest became financially linked to a separate dispute involving pipeline-gas deliveries.
The prosecutor seeks to apply compensation associated with the former investment against an alleged contractual debt.
This involves different Shell-group companies and different underlying transactions.
For shareholders, the implication is that withdrawal from an overseas investment may not necessarily eliminate the corporate group’s exposure to disputes associated with its previous commercial relationships.
But the existence of such exposure must not be confused with established liability.
The prosecutor’s allegations remain contested.
The court proceedings have not produced a publicly verified final judgment resolving the claims.
The historical parallel with 2006
There is also a significant connection with the earlier Sakhalin Papers.
In December 2006, Shell agreed to surrender majority control of Sakhalin II to Gazprom following a prolonged confrontation involving environmental allegations and regulatory pressure.
That transaction was negotiated.
Gazprom acquired a controlling interest.
The project continued.
In 2022, the situation was different.
Shell announced its withdrawal from Russian ventures following the invasion of Ukraine.
Russia imposed a new corporate structure through presidential measures.
Shell refused to participate.
The Russian government subsequently determined how the corresponding unclaimed interest would be disposed of.
The legal mechanisms were different.
The political circumstances were different.
But the broader historical lesson concerns the vulnerability of long-term international investments when governments possess substantial powers over the assets, infrastructure and regulatory arrangements within their territory.
Sakhalin II illustrates that vulnerability across two very different periods.
It also demonstrates why the history cannot be reduced to a single transaction or political confrontation.
The unanswered question
The most important unresolved question is not simply whether Russia assigned a reasonable value to the former Sakhalin interest.
It is whether Shell will ultimately receive compensation that it can lawfully and practically use.
That question depends on several distinct matters.
The legal consequences of the 2022 restructuring.
The operation of Russia’s special-account provisions.
Any valid deductions under the applicable arrangements.
The outcome of the separate gas-payment dispute.
And any remedies available to Shell outside the Russian proceedings.
The documents establish the framework and the competing positions.
They do not establish the final outcome.
That is why documentary caution remains essential.
DOCUMENTARY FINDINGS
Established by authenticated documents
President Putin signed Decree No. 416 on 30 June 2022.
The decree established a mechanism for disposing of unclaimed interests in the replacement Sakhalin II operating company.
It required the proceeds to be credited to a Type-C account.
It restricted the former shareholder’s ability to use those proceeds pending specified procedures.
It also provided for financial, environmental, technological and other audits, together with potential deductions concerning alleged damage.
Russian Government Order No. 890-r, dated 11 April 2023, approved Novatek Moscow Region LLC as purchaser of the unclaimed 27.5% interest for 94.8 billion roubles.
Russian Government Order No. 701-r, dated 23 March 2024, revoked that arrangement and approved Sakhalin Project LLC as purchaser at the same price.
Shell’s chief financial officer stated on 4 May 2023 that the company had not received payment and retained its legal rights.
Shell’s 2025 Form 20-F confirms that it continued to hold its original shareholding in the Bermuda-registered Sakhalin Energy Investment Company Ltd.
The same filing identifies Russian proceedings brought against eight Shell-group entities on 2 October 2024.
The prosecutor seeks approximately €1.5 billion concerning alleged unpaid gas deliveries and permission to apply approximately 94 billion roubles of purported Sakhalin compensation against part of that alleged debt.
Shell reports substantial uncertainty concerning the outcome.
The latest procedural report identified for this investigation schedules further proceedings for 18 January 2027.
Allegations and disputed positions
The Russian prosecutor alleges that Shell unlawfully withdrew support from the original Sakhalin operating company.
The prosecutor alleges that Shell Energy Europe owes Gazprom Export approximately €1.5 billion for 2022 gas deliveries.
The prosecutor seeks to apply funds purportedly reserved for Shell’s Sakhalin compensation against part of that alleged debt.
These are contested claims.
Not established by the documents examined
It has not been established that Shell caused environmental or other damage under Decree No. 416.
No completed independent assessment of damages under that decree has been identified in the material examined.
It has not been established that Shell Energy Europe is legally liable for the €1.5 billion claimed.
It has not been established that Gazprom Export is entitled to the disputed Sakhalin compensation funds.
It has not been established that Shell received 94.8 billion roubles as unrestricted cash.
Nor has a publicly verified final judgment resolving the Russian prosecutor’s claims been identified.
The legal effects of the restructuring under potentially applicable international agreements remain distinct from the measures adopted under Russian domestic law.
PRINCIPAL DOCUMENTARY SOURCES
1. Russian Presidential Decree No. 416 — 30 June 2022
The original legal instrument establishing the replacement Sakhalin II operating company, the treatment of unclaimed interests, the Type-C account arrangements and the procedures concerning alleged damage.
Particularly relevant are paragraph 1, subparagraphs (h) through (m).
Read the Reproduced Russian Legal Text of Decree No. 416
2. Russian Government Order No. 890-r — 11 April 2023
The order approving Novatek Moscow Region LLC as purchaser of the unclaimed interest for 94.8 billion roubles.
Read Government Order No. 890-r
3. Russian Government Order No. 701-r — 23 March 2024
The order revoking the earlier Novatek arrangement and approving Sakhalin Project LLC as purchaser for the same amount.
Read Government Order No. 701-r
4. Interfax — 4 May 2023
Contemporaneous reporting of Shell Chief Financial Officer Sinead Gorman’s statement that Shell had not received payment and continued to retain its legal rights.
Shell Has Not Received Funds for Sakhalin II Stake, Says CFO
5. Interfax — 25 March 2024
Contemporaneous reporting confirming that Gazprom replaced Novatek as the approved purchaser.
Gazprom Replaces Novatek as Buyer of Sakhalin Energy Interest
6. Shell plc — Full-Year 2022 Financial Disclosures
Original SEC-hosted corporate disclosures covering the Sakhalin II impairment, loss of significant influence, restructuring and zero carrying value.
Shell Full-Year 2022 Financial Disclosures — SEC
7. Shell plc — 2025 Annual Report and Form 20-F
Filed with the United States Securities and Exchange Commission on 12 March 2026.
The Russia disclosure describes Shell’s remaining interest in the original Bermuda company.
Note 32, Legal Proceedings and Other Contingencies, describes the Russian prosecutor’s proceedings and requested remedies.
Shell plc 2025 Form 20-F — Original SEC Filing
8. Moscow Arbitration Court — Case A40-241354/2024
Publicly identified proceedings brought by the Russian Prosecutor General against Shell-group entities.
An order dated 11 October 2024 is identified in the available legal record.
The proceedings are understood to be conducted behind closed doors.
Jus Mundi — Prosecutor General’s Office v Shell, Moscow Arbitration Court
9. X-Compliance/Interfax — 8 July 2026
The most recent procedural report identified for this investigation, stating that the proceedings are scheduled to continue on 18 January 2027.
Russian Court to Continue Shell Proceedings in January 2027
10. Donovan–Shell Archive — 18 and 19 September 2026
Earlier instalments examining the original sale arrangements and the development of the subsequent gas-payment dispute.
The Sakhalin Papers LI — The Billion-Rouble Exit Price
The Sakhalin Papers LII — The Type-C Account and the €1.5 Billion Claim
These earlier investigations provide the detailed commercial and litigation chronology. The present instalment concentrates on the original decree’s specific restrictions and their consequences for the payment of compensation.
DOCUMENTARY DISCLAIMER
This instalment draws upon published Russian legal instruments, authenticated Shell financial disclosures filed with the United States Securities and Exchange Commission, contemporaneous Interfax reporting, available court records and material preserved in the Donovan–Shell Archive.
The Russian presidential decree and government orders are examined as legal measures adopted under Russian domestic law.
Their description does not constitute a determination that the measures extinguished every contractual or investment right potentially enforceable under other applicable laws or agreements.
The English explanations of the Russian instruments are summaries of the original Russian-language provisions.
The original Bermuda-registered Sakhalin Energy Investment Company Ltd is distinguished from the replacement Russian operating company, Sakhalin Energy LLC.
The 94.8 billion-rouble government-approved sale price is distinguished from the approximately 94 billion roubles identified in Shell’s later litigation disclosures.
Neither amount is represented as unrestricted cash received by Shell.
Shell’s accounting impairment is distinguished from the Russian valuation and from any potential compensation entitlement.
The original audit-and-damages mechanism established by Decree No. 416 is distinguished from the later claim involving disputed gas deliveries to Shell Energy Europe.
No allegation is made that Shell or its personnel caused environmental damage merely because the Russian decree authorised an investigation.
No allegation is made that Shell Energy Europe unlawfully withheld gas payments.
The Russian prosecutor’s claims are identified as allegations and are not presented as established judicial findings.
The full contractual evidence and complete Russian court proceedings have not been independently examined.
The case has been reported as proceeding behind closed doors, limiting the information available to external researchers.
No publicly verified final judgment resolving the claims has been identified.
Editorial interpretation is separated from authenticated documentary findings.
Relevant factual corrections, additional primary documents and responses from Shell, Gazprom, Novatek or other interested parties are welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-109 — The Sakhalin Papers XCIX: The Shareholding That Survived — Shell’s Bermuda Company, Its Novatek LNG Contract and the Exit That Remained Incomplete
Shell announced its intention to withdraw from Russian hydrocarbons in February 2022.
It resigned from the management of Sakhalin II.
It withdrew personnel.
It declined to participate in Russia’s replacement operating company.
And the Russian government ultimately arranged for the corresponding interest to pass to a Gazprom-controlled purchaser.
But Shell’s own 2025 Annual Report contains two important statements.
First, Shell still held its 27.5% minus one share interest in the original Bermuda-registered Sakhalin Energy Investment Company Ltd.
Second, Shell still held a long-term LNG purchase contract with a Novatek entity.
These disclosures raise questions concerning the legal and commercial meaning of corporate withdrawal.
What rights remained attached to Shell’s shares in the original Sakhalin Energy company?
What became of the long-term LNG supply contracts after Russia’s restructuring?
How did the Novatek contract survive the termination or suspension of other Russian commercial relationships?
And to what extent did Shell’s formal withdrawal leave behind contractual obligations or rights that could not simply be extinguished by a corporate announcement?
The next instalment will examine Shell’s original withdrawal commitments against its subsequent authenticated disclosures.
It will distinguish the continued existence of a legal shareholding from operational participation in an energy project.
It will also distinguish the existence of an LNG purchase contract from evidence of continuing physical deliveries.
The purpose will not be to suggest that Shell secretly continued operating Sakhalin II.
The purpose will be to establish precisely what the company had left behind — and what, according to its own financial statements, remained.
The Sakhalin Papers continue.
*This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, and shellwikipedia.com, are owned by John Donovan - more information here. There is also a Wikipedia segment, the Shell DPA Files, "Shell and the Spies", the Shell Leaks files, the Independent Shell Archive, as well as books written and published by John Donovan - Kindle eBooks. Timeline of the Donovan Shell Feud. Toxic History of Royal Dutch Shell Group. Shell and the Donovans: The Full Media Record — 550+ Articles, 110 Books, 40 Years. *All conjured up by internet wizz, Nick Gill.
