THE SHELL LEAKS FILES — 5 NOVEMBER 2026
Archive reference: SLF-2007-109
The Sakhalin Papers XCIX: The Shareholding That Survived — Shell’s Bermuda Company, Its Russian LNG Contracts and the Exit That Remained Incomplete
AN INDEPENDENT DOCUMENTARY INVESTIGATION
By the Donovan–Shell Archive
Researched and drafted with assistance from ChatGPT, using authenticated Shell financial statements, original corporate announcements, SEC filings, contemporaneous reporting, historical documents preserved in the Donovan–Shell Archive and publicly accessible regulatory records.
Nearly five years after Shell announced its intention to withdraw from its Russian energy investments, the company’s own financial disclosures reveal a complicated legal inheritance. Shell still reported ownership of 27.5% minus one share in the original Bermuda-registered company that once operated Sakhalin II, even though Russia had transferred the project’s operating rights to a replacement company. One long-term Russian LNG purchase agreement had been declared terminated following non-performance. Another, signed with a Novatek subsidiary in 2015, remained listed in Shell’s 2025 annual report. These are not indications that Shell secretly continued operating Sakhalin II. They demonstrate something more technically significant: withdrawing from an investment, losing control of its operating assets, terminating associated contracts and extinguishing every residual corporate right are different legal and financial events. The authenticated records allow those distinctions to be reconstructed.
Publication date: 5 November 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-108 — The Account That Could Not Pay, 4 November 2026
Principal authenticated evidence: Shell’s announcements of 28 February and 8 March 2022; Shell’s 2022, 2023 and 2025 Forms 20-F; Shell’s third-quarter 2026 interim financial report; the original 2015 Novatek LNG contract announcement; Shell’s April 2007 SEC-filed Sakhalin announcement; and contemporaneous Interfax, Reuters and S&P Global reporting.
Evidence standard: Corporate ownership is distinguished from operational participation; accounting carrying value from legal title; the existence of a contract from physical delivery under that contract; and the assertions of parties in a legal dispute from independently established judicial findings.
Introduction: The company that was supposed to have disappeared
The previous instalment examined Russia’s arrangements for disposing of Shell’s unclaimed interest in the replacement Sakhalin II operating company.
The Russian government established a value of 94.8 billion roubles.
It initially approved Novatek as purchaser.
It subsequently replaced Novatek with a Gazprom-controlled company.
And the potential proceeds became entangled in a separate Russian lawsuit involving alleged unpaid gas deliveries.
But a different question remained.
What happened to the company through which Shell had originally held its investment?
The answer appears in Shell’s 2025 Form 20-F, filed with the United States Securities and Exchange Commission on 12 March 2026.
The relevant disclosure is brief.
Under the heading Russia, Shell states that it still holds a 27.5% minus one share interest in Sakhalin Energy Investment Company Ltd.
It identifies that company as a Bermuda entity.
It then says that the entity purportedly no longer possesses the licences, rights and obligations associated with Sakhalin II.
Finally, Shell confirms that it still holds a long-term LNG purchase agreement with a Novatek entity.
These statements appear together in one short passage.
Yet they describe three separate legal and commercial circumstances.
Shell continues to report an ownership interest in the original company.
Russia has transferred the operating project to another company.
And Shell continues to report a separate Russian LNG contractual relationship.
The distinction between these circumstances is the subject of this investigation.
Shell’s operational withdrawal was substantially accomplished. The documentary record nevertheless shows that not every associated corporate or contractual relationship had disappeared.
Primary source: Shell plc — 2025 Form 20-F, Integrated Gas, Russia, page 50. SEC
1. The original Sakhalin company had a long history
Sakhalin Energy Investment Company Ltd, generally known as SEIC, was established in Bermuda.
For decades, it served as the company through which the international shareholders developed and operated Sakhalin II.
The project was governed by a production-sharing agreement concluded in 1994.
Its development involved enormous capital expenditure.
Offshore production platforms had to be constructed.
Oil and gas pipelines crossed Sakhalin Island.
A liquefied natural gas plant was built at Prigorodnoye.
Export facilities were established for international customers.
The legal structure mattered because the investors were financing a major project under contractual arrangements intended to operate over an extended period.
Shell was originally the largest shareholder.
By the beginning of 2006, its interest was approximately 55%.
Mitsui held 25%.
Mitsubishi held 20%.
The subsequent entry of Gazprom fundamentally altered that arrangement.
On 21 December 2006, Shell, Mitsui, Mitsubishi and Gazprom signed a protocol providing for Gazprom to acquire 50% plus one share.
The agreed consideration was $7.45 billion.
The existing shareholders would each reduce their interests by half.
Shell would retain 27.5% minus one share.
Gazprom would become the majority shareholder.
But the original Bermuda company would remain the project operator.
That final point is important.
The 2006 transaction changed the ownership of the company.
It did not replace the company itself with an entirely different legal entity.
The original arrangements were implemented through a share-sale agreement signed on 18 April 2007.
Shell’s contemporaneous announcement was filed with the SEC.
It confirmed that Shell would continue contributing technical expertise to Sakhalin II.
The company therefore retained a substantial commercial and managerial role after relinquishing majority ownership.
Authenticated source: Shell’s SEC Filing — Gazprom Enters Sakhalin II, 18 April 2007.
Historical archive: Gazprom, Shell, Mitsui and Mitsubishi Sign Sakhalin II Protocol, 21 December 2006. SEC
2. February 2022: Shell announces its intention to leave
Russia’s full-scale invasion of Ukraine on 24 February 2022 created a fundamentally different political environment.
Four days later, Shell announced its intention to withdraw from its partnerships with Gazprom and related entities.
The announcement specifically identified Sakhalin II.
Shell also referred to Salym Petroleum Development, the Gydan venture and its involvement in financing Nord Stream 2.
Then-chief executive Ben van Beurden condemned Russia’s invasion.
The company’s board stated that it intended to exit the identified investments.
The language was significant.
Shell announced an intention to withdraw.
It did not claim that every contractual and corporate step necessary to complete that withdrawal had already occurred.
The company acknowledged that detailed business implications would have to be examined, including compliance with applicable sanctions.
On 8 March 2022, Shell broadened its announcement.
It said that it intended to withdraw from involvement in all Russian hydrocarbons.
That included crude oil, petroleum products, gas and LNG.
But Shell included an important qualification.
The withdrawal would proceed in a phased manner.
Its immediate actions included ending spot purchases of Russian crude.
Other arrangements would require separate decisions and implementation.
The distinction was evident from the beginning.
An announced corporate policy was not itself a legal instrument automatically terminating every investment, shareholding and commercial agreement.
Primary sources:
Shell — Intention to Exit Gazprom Partnerships, 28 February 2022.
Shell — Intention to Withdraw from Russian Oil and Gas, 8 March 2022. GlobeNewswire
3. Shell withdrew its management and technical personnel
The company’s subsequent financial disclosures record the practical consequences of its decision.
Shell’s executive directors resigned from Sakhalin Energy.
Managerial and technical personnel were withdrawn.
Shell concluded that it had lost significant influence over the investment from 1 April 2022.
This had important accounting consequences.
Previously, Shell had treated Sakhalin Energy as an associate.
Under that arrangement, its financial reporting reflected its interest in an enterprise over which it exercised significant influence.
Following the withdrawal of its directors and personnel, that accounting treatment was no longer considered appropriate.
Shell reclassified the investment as a financial asset measured at fair value.
Its financial disclosures also recorded a $1.614 billion impairment against Sakhalin II in the first quarter of 2022.
The impairment reflected the reassessment of the investment following the decision to withdraw.
This was a substantial accounting event.
But it was not a transfer of shares to a purchaser.
Nor was it evidence that the original Bermuda company had been dissolved.
The distinction is fundamental.
Loss of significant influence can change how an investment is accounted for without necessarily extinguishing the legal ownership of the underlying shares.
Shell’s disclosures demonstrate precisely that distinction.
Source: Shell — Second-Quarter 2022 Financial Results and Sakhalin Disclosure. Investegate
4. Russia replaced the operator — not Shell’s original share certificate
On 30 June 2022, President Vladimir Putin signed Presidential Decree No. 416.
The decree established arrangements for replacing the existing Sakhalin II operating company with a new Russian company.
The original operating entity was registered in Bermuda.
The replacement entity would be subject to Russian law.
The decree required the transfer of the project’s operating rights and obligations into the new structure.
Foreign shareholders were given an opportunity to seek equivalent interests.
The Russian authorities would decide whether their applications were approved.
Mitsui and Mitsubishi subsequently accepted the new arrangements.
Shell refused.
On 1 September 2022, it formally notified the Russian authorities that it would not apply for an interest in the replacement company.
It also objected to the purported transfer of the original company’s assets and rights.
And it reserved its legal remedies.
Those events were examined in the previous two instalments.
But the distinction between the companies becomes particularly important here.
The new Russian company was not simply the original Bermuda company operating under a different trading name.
It was a separately established legal entity.
Russia’s decree purported to transfer the project-related rights and obligations into that new entity.
Shell did not accept participation in it.
The company’s original shareholding therefore required separate consideration.
The Russian government subsequently approved arrangements for disposing of the corresponding unclaimed interest in the replacement company.
That did not necessarily amount to a conventional transfer of Shell’s original Bermuda-company shares.
The two companies must not be treated as interchangeable.
Sources: Reuters — Russia Seizes Control of Sakhalin II Project, 1 July 2022; Shell — 2022 Annual Report and Form 20-F. Investing.com
5. The accounting records provide the crucial distinction
Shell’s 2023 Form 20-F contains one of the clearest explanations of what happened.
Note 14, Investments in Securities, identifies the company’s retained interest in Sakhalin Energy Investment Company Ltd.
It confirms the accounting treatment before and after 1 April 2022.
Before that date, Shell accounted for the investment as an associate.
After losing significant influence, it accounted for the interest as an equity security measured at fair value.
The filing then records that the investment had a carrying value of zero at 31 December 2022.
It remained zero at 31 December 2023.
This evidence is more precise than saying that Shell simply lost or sold its Sakhalin investment.
The company continued to report ownership of shares.
But those shares no longer had a recognised carrying value in its accounts.
For readers unfamiliar with corporate financial reporting, the distinction may seem unusual.
It is nevertheless important.
An investment can continue to exist as a legal interest even when the reporting company concludes that its fair value is zero.
The accounting treatment reflects the applicable recognition and valuation requirements.
It does not necessarily establish that every potential legal right associated with the shares has been extinguished.
Conversely, retaining legal title to shares does not establish that the shares possess substantial recoverable economic value.
Shell’s Sakhalin disclosure illustrates both principles.
The original shareholding survived in the company’s reported ownership records.
The recognised accounting value did not.
Primary source: Shell — 2023 Form 20-F, Note 14, Investments in Securities, page 259. SEC
6. The 2025 annual report confirms the surviving ownership interest
The most recent detailed annual disclosure provides the next documentary checkpoint.
Shell’s 2025 Form 20-F was filed with the SEC on 12 March 2026.
In its Integrated Gas section, the company again reported its remaining interest in the original Bermuda entity.
It also qualified the status of that entity’s former operating rights.
The wording deserves careful consideration.
Shell says the original company purportedly no longer possesses the licences, rights and obligations relating to Sakhalin II.
That qualification matters.
It preserves the distinction between Russia’s asserted transfer under its domestic measures and the wider legal consequences of that transfer.
It does not establish that Shell continues to possess an enforceable right to operate the project.
Nor does it establish that an international court has determined the Russian measures to be invalid.
It records Shell’s position in a contested restructuring.
There is also an important accounting qualification.
Although the 2025 report confirms the continuing shareholding, the general investments-in-securities note does not provide a separately identified updated carrying value for Sakhalin Energy.
The earlier report specifically recorded a zero carrying value at the end of 2023.
It would therefore be inappropriate to invent a new valuation for 2025.
The verified position is narrower.
Shell’s 2025 Form 20-F confirms that the original shareholding remained in its reported portfolio.
It does not establish that the shareholding had regained commercial value.
Source: Shell plc — 2025 Form 20-F, pages 50 and 259. SEC
7. An independent corporate-identity check raises another distinction
There is an additional, less prominent record concerning the original company.
The Legal Entity Identifier database contains an entry for:
Sakhalin Energy Investment Company Ltd.
Its identifier is:
254900UD74QC94TFU508.
The record identifies Bermuda as the company’s legal jurisdiction.
It gives a Bermuda registration reference of 19370.
The record also identifies the company’s legal-entity status as active.
However, the same record shows that its Legal Entity Identifier registration has lapsed.
The last recorded update occurred in December 2022.
These details require careful interpretation.
A lapsed Legal Entity Identifier does not necessarily mean the associated company has been dissolved.
The identifier’s renewal status and the company’s legal existence are separate matters.
Equally, an old legal-entity record should not be treated as definitive proof of the company’s current standing under Bermuda law.
The authoritative source for that question is the Bermuda Registrar of Companies.
A current certified registry extract has not been obtained for this investigation.
Accordingly, Shell’s own 2025 Form 20-F remains the strongest authenticated evidence that the group continued to report an ownership interest in the original entity.
The Legal Entity Identifier record provides useful supporting identification.
It does not independently determine the present legal status of the company or the enforceability of any associated rights.
Sources:
Sakhalin Energy Investment Company Ltd — Legal Entity Identifier Record.
Bermuda Registrar of Companies — Official Corporate Registers. LEI.report
8. The Sakhalin LNG purchase agreement followed a different legal path
The survival of Shell’s original shares must also be distinguished from its contractual rights to purchase LNG.
Shell had a substantial commercial relationship with Sakhalin II.
That relationship included long-term LNG purchase arrangements.
Those contracts were separate from its ownership interest in the operating company.
A shareholder may enter into supply contracts with a company in which it owns shares.
But the legal rights arising under the supply agreement are not identical to the rights arising from share ownership.
This distinction became important after Russia’s restructuring.
In February 2023, Shell reported that it was no longer receiving LNG cargoes due under its long-term agreement with the original Sakhalin Energy company.
Contemporaneous Interfax reporting recorded Shell’s position.
The company said that the transfer of licences, assets, liabilities and personnel to the replacement Russian company meant it was no longer receiving the contracted deliveries.
Shell was considering its legal options.
Its subsequent 2023 annual report went further.
Shell stated that the original Sakhalin Energy company had renounced the long-term LNG purchase contract by failing to perform.
Shell consequently considered the agreement terminated.
That is the company’s contractual position.
It should not be represented as a judicial determination of breach.
The complete underlying supply agreement and any applicable dispute-resolution proceedings have not been independently examined.
Nevertheless, the financial disclosures establish that Shell regarded its Sakhalin LNG purchase agreement as terminated.
The original shareholding remained recorded. The associated Sakhalin LNG purchase agreement did not remain in force on Shell’s stated contractual position.
This is another example of separate legal relationships following different paths.
Contemporaneous source: Interfax — Shell Announces Cessation of Sakhalin LNG Supplies, 2 February 2023.
Authenticated source: Shell — 2023 Form 20-F, Russia Disclosure.
Earlier archive investigation: The Shell Leaks Files — 20 September 2026: The Missing LNG Cargoes. interfax.com
9. The Novatek contract was different again
Shell’s remaining Russian LNG purchase agreement involved Novatek.
The original contract was announced on 4 June 2015.
Novatek’s contemporaneous press release identifies the contractual parties.
The seller was Novatek Gas & Power.
The buyer was Shell International Trading Middle East.
The agreement concerned LNG from the Yamal LNG project.
Its stated annual volume was approximately 900,000 tonnes.
The contractual duration was more than twenty years.
That agreement was not a Sakhalin II ownership arrangement.
Nor was it an agreement for Shell to acquire an interest in the Sakhalin II replacement company.
It concerned the purchase of LNG from a separate Russian Arctic project.
This distinction becomes particularly important because Novatek also appeared in the later Sakhalin ownership dispute.
In April 2023, a Novatek subsidiary was approved as the prospective purchaser of the unclaimed Sakhalin interest.
That proposed acquisition was subsequently superseded by Russia’s approval of a Gazprom-controlled purchaser.
The 2015 Yamal LNG supply agreement and the proposed 2023 Sakhalin acquisition were different commercial matters.
They involved different corporate arrangements.
The existence of one does not establish completion of the other.
The original 2015 supply agreement is authenticated by Novatek’s published corporate announcement.
Primary source: Novatek — Original Announcement of Long-Term LNG Contract with Shell, 4 June 2015. novatek.ru
10. Shell’s remaining contract does not establish continuing deliveries
The Donovan–Shell Archive examined the surviving Novatek agreement in detail on 21 September 2026.
That earlier investigation established that Shell had confirmed continuing receipt of Yamal LNG cargoes in February 2023.
It also traced the agreement through Shell’s subsequent annual reports.
The present investigation does not repeat that earlier contractual history.
Its purpose is to identify what the agreement demonstrates about the legal consequences of Shell’s broader Russian withdrawal.
The crucial distinction is between a contract’s continued existence and its continuing physical performance.
Shell’s 2025 Form 20-F confirms that one long-term LNG purchase agreement with a Novatek entity remained.
But the disclosure does not identify individual cargoes received during 2025.
It does not establish the destinations of any such cargoes.
Nor does it provide contract-specific revenues or profits.
Shell published its third-quarter 2026 financial results on 29 October 2026.
That interim report does not provide a new, separately identified update on the Sakhalin shareholding or the Novatek agreement.
The latest detailed annual disclosure therefore remains the relevant documentary starting point.
It would be inappropriate to infer from the continuing contract disclosure that Shell was necessarily receiving Yamal LNG cargoes in November 2026.
Equally, the absence of cargo information in the annual report is not proof that no deliveries occurred.
These questions require transaction-specific evidence.
Sources:
Shell — Third-Quarter 2026 Interim Financial Report, 29 October 2026.
The Shell Leaks Files — 21 September 2026: The Russian LNG Contract That Survived. SEC
11. The approaching European deadline
A further complication concerns the European Union’s new restrictions on Russian gas imports.
On 26 January 2026, the Council of the European Union formally adopted legislation providing for the phased elimination of Russian pipeline-gas and LNG imports.
The measures entered into force in February 2026.
The regime distinguishes between contracts according to their type, duration and date.
For existing long-term Russian LNG purchase agreements, the general prohibition takes effect on:
1 January 2027.
That deadline is now less than two months away.
Its significance for the Russian LNG industry is substantial.
But the implications for Shell’s Novatek agreement require care.
The European legislation governs specified imports into the European Union.
Shell’s LNG business operates internationally.
Its trading activities involve multiple legal entities, supply locations, delivery destinations and contractual relationships.
The existence of a long-term agreement with a Russian supplier therefore does not, by itself, establish a breach of European sanctions.
Nor does the European import prohibition necessarily terminate every relevant contractual obligation under the law governing the underlying agreement.
The commercial and legal consequences would depend on the particular contract and activities.
The full Shell–Novatek agreement has not been published.
No finding of unlawful conduct is made.
The documentary relevance is that a contractual arrangement signed in 2015 remains listed in Shell’s latest annual report while the regulatory environment governing Russian LNG has changed fundamentally.
Official source: Council of the European Union — Russian Gas Imports: Final Approval of Stepwise Ban, 26 January 2026.
European Commission guidance: REPowerEU — Phase-Out of Russian Energy Imports. Consilium
12. What remains of Shell’s original Sakhalin investment?
The documentary picture can now be reconstructed.
In 2007, Shell retained a substantial interest in the company operating Sakhalin II.
That interest followed a negotiated transaction in which Gazprom acquired majority ownership.
In 2022, Shell announced its intention to withdraw from Russia.
Its directors resigned from Sakhalin Energy.
Its managerial and technical personnel were withdrawn.
The company lost significant influence over the project.
Russia subsequently imposed a new operating structure.
Shell refused to participate.
The Russian government arranged for the corresponding unclaimed interest in the replacement company to be sold.
Shell’s original shareholding nevertheless continued to appear in its corporate disclosures.
The company’s 2023 accounts recorded a zero carrying value.
Its 2025 Form 20-F continued to identify the shareholding.
These statements can all be true simultaneously.
The original shares may remain legally held.
The company issuing those shares may have lost the operating assets that previously gave the investment its commercial significance.
And the original shareholder may continue to dispute aspects of the transaction.
The existence of residual legal rights does not guarantee that they can be exercised successfully.
Nor does it establish that the original project can be recovered.
The important point is that the different legal and financial relationships must be examined individually.
A simple declaration that Shell has left Sakhalin II cannot, by itself, answer every question concerning those relationships.
13. The surviving shareholding is relevant to the Russian litigation
The importance of the original company extends beyond accounting.
On 2 October 2024, the Russian Prosecutor General initiated proceedings involving eight Shell-group entities.
Shell’s 2025 Form 20-F describes the principal claims.
The prosecutor seeks declarations concerning what it characterises as Shell’s unlawful abandonment of support for Sakhalin Energy.
It also seeks approximately €1.5 billion from Shell Energy Europe Limited concerning alleged unpaid gas deliveries in 2022.
And it seeks permission for Gazprom Export to apply approximately 94 billion roubles of purported Sakhalin compensation against part of that alleged debt.
The proceedings remain contested.
No publicly verified final judgment determining the claims has been identified for this investigation.
But the proceedings help explain why the history of the original Sakhalin company remains relevant.
The prosecutor’s case addresses Shell’s withdrawal from the original investment.
It also seeks to connect disputed compensation associated with that withdrawal to another commercial relationship.
This does not establish that the Russian claims are justified.
It does establish that Shell’s departure continued to generate legal disputes after operational participation had ceased.
The distinction is significant.
Corporate disengagement does not necessarily bring an immediate end to contractual disputes, financial claims or disagreements over legal rights.
Shell’s own annual report demonstrates that those questions remained unresolved when the 2025 accounts were published.
Primary source: Shell — 2025 Form 20-F, Note 32: Legal Proceedings and Other Contingencies, page 288. SEC
EDITORIAL COMMENTARY
The difference between leaving a project and extinguishing every legal relationship
The central lesson of these documents concerns the complexity of multinational corporate withdrawal.
Public announcements are necessarily concise.
A company says it is leaving a country.
Investors and customers understand the broad commercial intention.
But the corporate structure underlying that announcement may contain decades of legal arrangements.
There may be equity interests in local or offshore companies.
There may be production-sharing agreements.
There may be long-term supply contracts.
There may be outstanding dividends, commercial receivables, financing arrangements and other obligations.
There may also be disputes over whether those rights and obligations have been transferred, terminated or otherwise affected.
The Sakhalin II withdrawal involved several of these complications.
Shell could withdraw its personnel.
It could resign from management.
It could refuse to participate in the new Russian operating company.
But those actions did not automatically determine the legal fate of its original Bermuda shareholding.
Nor did they necessarily terminate every separate Russian LNG agreement.
This is not evidence of a concealed scheme to remain involved in Sakhalin II.
It is evidence of the difference between operational withdrawal and the complete resolution of every associated legal and commercial relationship.
That distinction deserves to be understood by shareholders.
The company survived in the records, but its commercial significance changed
Shell’s continuing disclosure of its original shareholding is intriguing.
However, its meaning should not be exaggerated.
The company reported a zero carrying value for the investment at the end of 2023.
It had lost significant influence.
Russia had established a replacement operator.
Shell had declined to join it.
Those circumstances substantially distinguish the remaining shareholding from Shell’s position before February 2022.
An ownership percentage can remain unchanged while the underlying investment’s circumstances change dramatically.
Before 2022, Shell’s interest was associated with participation in an operating international LNG project.
After the restructuring, the shares remained associated with a company whose former operating rights were subject to a contested transfer.
The continued percentage did not mean continued operational control.
Nor did it necessarily mean continued entitlement to the project’s production.
The financial statements themselves explain that distinction.
The more useful question is therefore not simply whether Shell still owned shares.
It is what rights, if any, remained practically enforceable through those shares.
The public records examined here do not provide a definitive answer.
Why the two Russian LNG contracts followed different paths
The comparison between Sakhalin and Yamal is instructive.
Shell held an equity interest in Sakhalin Energy.
It also held LNG purchasing rights associated with the Sakhalin project.
Separately, Shell had entered into a long-term agreement to buy Yamal LNG from a Novatek entity.
These were different transactions.
The restructuring of Sakhalin II directly affected the original operator and the contracts under which it delivered LNG.
Shell subsequently considered the Sakhalin LNG agreement terminated through non-performance.
The Novatek agreement concerned a different project.
It did not depend upon Shell remaining a Sakhalin shareholder.
Its continued disclosure therefore does not establish that the Sakhalin withdrawal failed.
It establishes that the wider Russian withdrawal involved another contractual relationship that followed a different course.
That distinction should be preserved even when the same corporate name — Novatek — appears elsewhere in the Sakhalin sale chronology.
The shareholder question
Shell shareholders are entitled to distinguish three separate propositions.
The company announced a policy of withdrawing from Russian hydrocarbons.
It undertook substantial steps to implement that policy.
And some associated corporate or contractual relationships continued to appear in its later disclosures.
Those propositions are not inherently contradictory.
But they raise legitimate questions about the continuing treatment of residual interests.
For example, what is the present legal and accounting status of the original Sakhalin shareholding?
Has Shell pursued, or does it intend to pursue, any additional remedies concerning the purported transfer of the operating company’s rights?
What financial or contractual consequences remain associated with the Novatek LNG purchase agreement?
And how will the European Union’s January 2027 restrictions affect any activities involving that agreement?
These are questions for which authenticated documents and properly attributed company responses are preferable to speculation.
No evidence examined for this instalment establishes that Shell concealed the original shareholding or the Novatek contract from shareholders.
Both were disclosed.
The issue is how those disclosures should be interpreted.
The historical irony
There is a further historical contrast.
In December 2006, Shell agreed to surrender control of Sakhalin II.
The company nevertheless retained a substantial interest, continued in management and remained technical adviser.
The original operating company survived.
In 2022, Shell refused to participate in Russia’s replacement structure.
Its management and technical role had already ended.
But the original shares remained in its subsequent financial disclosures.
The two episodes were legally and politically different.
One involved a negotiated acquisition of shares by Gazprom.
The other involved a state-imposed restructuring and a disputed transfer of operating rights.
Yet both demonstrate the importance of understanding the precise legal structure through which an international investment is held.
In 2006, the preservation of the original company helped Shell continue its involvement after losing control.
In 2022, the continued existence of that original shareholding became part of the complicated aftermath of withdrawal.
The same corporate structure appears at both ends of the story.
But its practical significance changed almost completely.
DOCUMENTARY FINDINGS
Established by authenticated corporate records
Shell announced its intention to withdraw from Gazprom partnerships on 28 February 2022.
It broadened that announcement to all Russian hydrocarbons on 8 March 2022, specifying a phased withdrawal.
Its executive directors resigned from Sakhalin Energy, and managerial and technical personnel were withdrawn.
Shell reported losing significant influence over the investment from 1 April 2022.
It subsequently accounted for the remaining interest as an equity security rather than an associate.
Its 2023 Form 20-F recorded a zero carrying value for that interest at 31 December 2022 and 31 December 2023.
Russia established a replacement operating company under Presidential Decree No. 416.
Shell refused to participate in the replacement company and objected to the purported transfer of the original operator’s rights.
Shell’s 2025 Form 20-F continued to identify its 27.5% minus one share interest in the original Bermuda entity.
Shell considered its long-term Sakhalin LNG purchase contract terminated following non-performance.
Shell’s 2025 Form 20-F also continued to identify one long-term LNG purchase agreement with a Novatek entity.
The original Novatek agreement announced in June 2015 concerned Yamal LNG, not Sakhalin II.
The latest detailed annual filing does not identify individual Novatek cargoes received during 2025.
Positions attributed to the parties
Shell disputes the purported transfer of the original Sakhalin company’s rights and has reserved legal remedies.
Shell characterised non-performance under its Sakhalin LNG purchase agreement as contractual renunciation.
Russia established a replacement operating company and arrangements for disposing of unclaimed interests under its domestic legal measures.
The Russian prosecutor alleges unlawful conduct associated with Shell’s withdrawal and seeks monetary and declaratory relief.
These positions are distinguished from independently established judicial findings.
Not established by the documents examined
The surviving Bermuda shareholding does not establish that Shell continues to control Sakhalin II.
It does not establish that Shell has regained the operating rights transferred under the Russian measures.
It does not establish that the original shares currently possess substantial recoverable value.
It has not been established that Shell continues physically receiving Yamal LNG cargoes in November 2026.
The existence of the Novatek contract does not establish a breach of sanctions.
The complete original LNG contract terms have not been independently examined.
No publicly verified final judgment resolving the Russian prosecutor’s claims has been identified.
The precise enforceability of any residual shareholder rights under applicable domestic or international law remains a separate legal question.
PRINCIPAL DOCUMENTARY SOURCES
1. Shell plc — 2025 Form 20-F, filed 12 March 2026
The principal authenticated source for the surviving Sakhalin shareholding, the Novatek LNG purchase agreement and the Russian litigation.
Read Shell’s Original 2025 SEC Filing.
2. Shell plc — 2023 Form 20-F
Provides the detailed explanation of the original Sakhalin shareholding, the loss of significant influence, the financial-asset classification and the zero carrying value.
3. Shell plc — 2022 Form 20-F
Documents the original withdrawal decisions, impairment, Russian restructuring and continuing LNG purchase arrangements.
Shell’s Original 2022 SEC Filing.
4. Royal Dutch Shell plc — SEC Filing, 18 April 2007
The original corporate announcement documenting the completion of Gazprom’s acquisition of 50% plus one share of Sakhalin Energy.
Read the Original 2007 SEC Filing.
5. Shell plc — Withdrawal Announcement, 28 February 2022
The board’s announcement of its intention to exit Gazprom partnerships, including Sakhalin II.
Shell’s Original Withdrawal Announcement.
6. Shell plc — Russian Hydrocarbons Withdrawal Announcement, 8 March 2022
The company’s broader statement concerning a phased withdrawal from Russian hydrocarbons.
Shell’s 8 March 2022 Announcement.
7. Novatek — Original LNG Contract Announcement, 4 June 2015
Identifies the contracting parties, Yamal LNG source, approximate annual quantity and contractual duration.
Novatek’s Original Press Release — PDF.
8. Interfax — 2 February 2023
Contemporaneous reporting of the cessation of LNG supplies under the original Sakhalin purchase agreement.
Shell Announces Cessation of Sakhalin LNG Supplies.
9. Shell plc — Third-Quarter 2026 Interim Report
Published on 29 October 2026. Reviewed for any subsequent separately identified update concerning the Sakhalin shareholding and Novatek agreement.
Shell’s Third-Quarter 2026 SEC Filing.
10. Council of the European Union — 26 January 2026
The official announcement concerning the adopted regulation phasing out Russian LNG and pipeline-gas imports.
Council Approves Russian Gas Import Phase-Out.
11. Bermuda Corporate Identification Records
The Legal Entity Identifier entry provides supporting identification of the original company. The Bermuda Registrar remains the authoritative source for current corporate status.
Sakhalin Energy Investment Company — Legal Entity Identifier.
Bermuda Registrar of Companies.
12. Donovan–Shell Archive — Earlier Investigations
The following investigations provide the detailed historical and contractual background rather than repeating it here.
20 September 2026 — The Missing LNG Cargoes.
21 September 2026 — The Russian LNG Contract That Survived.
4 November 2026 — The Account That Could Not Pay.
DOCUMENTARY DISCLAIMER
This investigation is based upon authenticated Shell corporate announcements, annual financial statements filed with the United States Securities and Exchange Commission, original corporate records issued by Novatek, contemporaneous Interfax and Reuters reporting, publicly available regulatory information and historical documents preserved in the Donovan–Shell Archive.
The original Bermuda-registered Sakhalin Energy Investment Company Ltd is distinguished from the Russian replacement operating company established in 2022.
Shell’s retained ownership interest in the original Bermuda entity is not represented as evidence of continuing operational control over Sakhalin II.
The historical accounting classification of the original investment is distinguished from its continuing legal ownership.
The zero carrying value recorded in Shell’s 2023 annual report is not represented as proof that every potentially enforceable legal right had been extinguished.
Nor is the continuing legal ownership of shares represented as proof that they possess substantial recoverable economic value.
The Legal Entity Identifier record is used for identification and not as conclusive evidence of current corporate standing under Bermuda law.
A current certified extract from the Bermuda Registrar of Companies has not been obtained.
Shell’s characterisation of the termination of its Sakhalin LNG purchase agreement is attributed to the company.
It is not presented as an independent judicial determination of contractual breach.
The original Shell–Novatek LNG purchase agreement has not been independently obtained in full.
The agreement’s existence is distinguished from proof of continuing physical deliveries.
No allegation is made that Shell violated European Union, British or other applicable sanctions.
References to the European Union’s January 2027 Russian LNG import prohibition do not establish that the Novatek contract itself is necessarily unlawful or automatically terminated.
The Russian prosecutor’s allegations are identified as contested claims.
No publicly verified final judgment establishing liability concerning those claims has been identified.
The investigation does not establish that Shell concealed its surviving Sakhalin shareholding or the Novatek agreement from shareholders. Both were disclosed in its regulatory filings.
Editorial analysis is identified separately from authenticated documentary findings.
Relevant corrections, additional original documents and responses from Shell, Gazprom, Novatek, the former Sakhalin Energy shareholders and other interested parties are welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-110 — THE SAKHALIN PAPERS C
The Hundredth File: Two Kremlin Interventions, One Shell Investment — What Twenty Years of Documents Actually Prove
The next instalment marks a significant milestone.
The 100th investigation in The Sakhalin Papers.
The documentary sequence has followed Sakhalin II through construction difficulties, environmental controversies, leaked internal correspondence, regulatory pressure, the Kremlin negotiations of December 2006, Gazprom’s acquisition of control, the project’s subsequent operation and the extraordinary events following Russia’s invasion of Ukraine.
The hundredth instalment will examine two moments that fundamentally changed Shell’s position.
21 December 2006.
Shell and its Japanese partners agreed that Gazprom would acquire a controlling interest in Sakhalin Energy for $7.45 billion.
The original operating company survived.
Shell remained a substantial shareholder and technical participant.
30 June 2022.
President Putin signed a decree establishing a replacement Russian operating company.
Shell subsequently refused to participate.
The operating rights were transferred under the Russian measures.
Compensation became disputed.
And the original Bermuda shareholding remained in Shell’s later financial disclosures.
The comparison raises important questions.
How did the 2006 negotiated transaction differ from the 2022 state-imposed restructuring?
What powers did Russia possess under the production-sharing agreement?
What did Shell’s own internal documents reveal about the company’s assessment of the earlier regulatory confrontation?
Which claims made by Russian officials were supported by contemporaneous evidence?
Which remained contested?
What role did environmental enforcement play in the 2006 negotiations?
And what can legitimately be concluded about the relationship between political power, corporate ownership and investment protection?
The investigation will return to the authenticated Shell internal correspondence, the original Kremlin statements, contemporary reporting, production-sharing documents and corporate financial records.
It will distinguish regulatory enforcement from political inference, a negotiated sale from a disputed transfer, and historical coincidence from demonstrable causation.
The purpose will not be to suggest that every accusation against Shell was justified.
Nor will it assume that every action taken by the Russian authorities was legally legitimate.
Instead, it will examine what the surviving documents establish about two extraordinary interventions affecting the same international investment.
There is also a wider question.
What does the Sakhalin II experience reveal about the risks facing international energy companies when contractual rights, national energy policy and geopolitical power collide?
After 100 investigations, the Donovan–Shell Archive possesses an unusually extensive documentary record from which to address that question.
The evidence includes records created before either crisis, material generated during the negotiations and corporate disclosures describing the consequences many years later.
Those sources deserve to be examined together.
The hundredth instalment will therefore be both a major documentary investigation and an evidential audit of the Sakhalin story so far.
Not every suspicion will survive that examination.
Not every accusation will be substantiated.
But the established facts are remarkable enough without exaggeration.
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.
