Royal Dutch Shell has agreed to sell its stake in the Sachalin-2 oil and gas project in Russia for an estimated €1.1 billion. The deal has been approved by Russian President Vladimir Putin, according to Russian newspaper Kommersant.
Shell had a 27.5% stake in Sachalin-2, a joint venture with Russia’s Gazprom, Mitsui and Mitsubishi. The project, located on Sakhalin Island in Russia’s Far East, is one of the world’s largest integrated oil and gas projects.
In 2014, Shell decided to exit the project due to the impact of Western sanctions on Russia’s oil and gas industry following the country’s annexation of Crimea. The company wrote off $1.6 billion on its stake in Sachalin-2 as a result of the move.
Since then, the Russian government had taken over Shell’s stake in the project and accused the company of causing damage to Sachalin-2. Kommersant reports that the Russian government wants to offset the compensation it owes to Shell with dividends that still belonged to the company.
Shell declined to comment on the reports.
The sale of its stake in Sachalin-2 is part of Shell’s ongoing divestment programme as it looks to streamline its operations and focus on cleaner energy. The company is targeting $4 billion to $5 billion in asset sales per year until 2025.
Despite its exit from Sachalin-2, Shell has maintained a presence in Russia, where it operates a number of joint ventures with Gazprom, including the Sakhalin-3 project.
Shell’s decision to sell its stake in Sachalin-2 is part of its ongoing divestment programme as it looks to streamline its operations and focus on cleaner energy.
This move could potentially allow the company to reallocate resources towards more sustainable and profitable ventures in the energy sector.
Additionally, while Shell has exited the Sachalin-2 project, it has maintained a presence in Russia through joint ventures with Gazprom, which could potentially provide new opportunities for growth and expansion. Ultimately, any decision to invest in Shell would require careful consideration of the company’s financial performance, market trends, and other relevant factors.
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