Shell follows BP, decides to exit Russia

Shell follows BP, decides to exit Russia

/ Oil & Gas / Tuesday, 01 March 2022 07:38

Shell has announced that it will exit from all its Russian operations, including its flagship Sakhalin 2 LNG plant in which it holds a 27.5% stake, and which is 50% owned and operated by Russian gas giant Gazprom.

Shell becomes the latest major Western energy company to quit Russia following Moscow's invasion of Ukraine. Shell had around $3 billion in non-current assets in these ventures in Russia at the end of 2021.

This development follows BP’s decision to forgo its stake in Russian oil giant Rosneft, which could cost the British company over $25 billion. Norway's Equinor has also hinted on its plans to exit Russia.

The Sakhalin 2 project, located off Russia's northeastern coast, produces around 11.5 million tonnes of LNG per year, which is exported to major markets including China and Japan.  Shell will also exit the Salym Petroleum Development, another joint venture with Gazprom. Salym and Sakhalin 2 contributed $700 million to Shell's net earnings in 2021.

For Shell, the world's largest LNG trader, leaving the project deals a blow to its plans to supply gas to fast-growing markets in the coming decades. Shell said the Russia exit will not affect its plans to switch to low-carbon and renewables energy.

As economic sanctions pile up against Russia, many European companies are planning their exit strategies from the country in conflict.

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