Kremlin-controlled energy giant Gazprom has acquired a 27.5 per cent stake, formerly owned by Shell, in Russian liquefied natural gas (LNG) producer Sakhalin Energy for around $1 billion, according to a government order.
The government also officially nullified its order a year
ago on selling the stake to Gazprom’s rival, Novatek, without explanation.
The Russian government said late on Monday that the 27.5 per
cent stake in Sakhalin Energy is due to be sold to a company called Sakhalin
Project for 94.8 billion roubles ($1.02 billion).
Sakhalin Project is fully owned by Gazprom, company filings
showed. Gazprom declined additional comments, while Novatek did not immediately
respond to a request for comment.
Gazprom owns 50 per cent in Sakhalin Energy located in the
southern tip of Russia’s Pacific island of Sakhalin. Other shareholders are
Japanese companies Mitsui (12.5 per cent) and Mitsubishi (10 per cent).
Following Moscow’s decision to send troops into Ukraine in
February 2022, Shell said it would quit the project, in which it held a stake
worth 27.5 per cent minus one share.
The company booked a $1.6 billion impairment related to the
Russian LNG project in the first quarter of 2022. Shell was not immediately
available for comment.
Sources have said Shell believed there was a risk Russia
would nationalise foreign-held assets, while Russian President Vladimir Putin
has repeatedly said Moscow would retaliate against the United States and its
allies for freezing Russian assets and other sanctions.
In June 2022, the Sakhalin-2 operating company was
transformed into a Russian entity via a presidential decree.
Shell as well as Mitsui and Mitsubishi were then asked to
apply to keep their stakes if they wanted to.
Moscow invited firms interested in obtaining Shell’s stake –
as well as Exxon Mobil’s abandoned share in the sister Sakahlin-1 project – to
submit applications to the government.
In 2022, Sakhalin energy accounted for almost 3 per cent of
global LNG demand. Its cargoes mainly head to Japan, South Korea, China, India
and other Asian countries.
Last year, it produced more than 10 million metric tons of
LNG, down from 11.5 million tons in 2022.