Bloomberg: Shell Talks to Chinese Buyers About Russian Property

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Shell is talking with major state-owned Chinese energy sector companies to sell its stake in a significant Russian liquefied natural gas (LNG) project. This is reported by the Bloomberg news agency based on insiders.

 

The British oil and gas group announced its departure from Russia because of the Russian invasion of Ukraine, but it still has assets in the country.

Among other things, Shell wants to get rid of its 27.5 percent interest in Sakhalin-2, a huge complex in the extreme east of Russia for the production of oil and LNG. Instead, the company would now negotiate with the Chinese state oil companies CNOOC, CNPC and Sinopec.

The talks are still early, so it is far from certain that a deal will be reached. However, there are scenarios on the table in which the interest goes to one or two buyers, but possibly also to a consortium. According to Bloomberg sources, Shell is also still open to buyers from outside China.

Shell declined to comment on the news. Spokespersons for CNOOC, CNPC and Sinopec were not immediately available for comment to Bloomberg. Shell previously said it expected write-offs of up to $5 billion due to its departure from Russia.

The sale of Russian assets is a tricky business. According to Shell’s peer TotalEnergies, there is then a risk that those parts will go to Russian buyers at a discount. They would then benefit from a measure intended to affect Russia economically. TotalEnergies, therefore, refuses to divest its Russian activities.

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