The Board of Shell announced February 28 its intention to exit joint ventures with Gazprom and related entities, including 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, 50 percent stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.
“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” said Shell’s chief executive officer, Ben van Beurden.
Shell’s staff in Ukraine and other countries has been working together to manage the company’s response to the crisis locally. Shell will also work with aid partners and humanitarian agencies to help in the relief effort.
“Our decision to exit is one we take with conviction,” said van Beurden. “We cannot – and we will not – stand by. Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia. In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”
At the end of 2021, Shell had around US$3 billion in non-current assets in these ventures in Russia. Shell expects that the decision to start the process of exiting joint ventures with Gazprom and related entities will impact the book value of Shell’s Russia assets and lead to impairments.
Shell’s announcement comes a day after BP abandoned its stake in Russian oil giant Rosneft.
Photo credit: Hazira LNG. Photographic Services, Shell International Limited.