Oil Supermajor Shell Follows BP And Equinor In Announcing Exit From Joint Ventures In Russia Over Ukraine Invasion

Oil and Gas behemoth Shell on Monday (Feb 28) announced its plan to exit its joint ventures in Russia, including a major liquefied natural gas plant, becoming the second big oil and third Western energy company to announce it is leaving the country in protest against Moscow's invasion of Ukraine.

The company's board said that it plans to exit from its joint ventures with Gazprom and related entities, including its 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture.

Shell also intends to end its involvement in the controversial 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 Ben van Beurden.

“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.”

At the end of 2021, Shell had around $3 billion in non-current assets in these ventures in Russia.

Shell has a 27.5 percent interest in Sakhalin-2, the joint venture with Gazprom, an integrated oil and gas project located on Sakhalin island. Sakhalin-2 is one of the world’s largest integrated, export-oriented, oil and gas projects, as well as Russia’s first offshore gas project. Sakhalin-2 supplies about 4% of the world’s current liquefied natural gas (LNG) market. Japan, South Korea and China are the main customers for oil and LNG exports.

Shell also has a 50 percent interest in a joint venture with Gazprom Neft that is developing the Salym fields in the Khanty Mansiysk Autonomous District of western Siberia.

Shell is also involved in joint venture with Gazprom to explore and develop blocks in the Gydan peninsula, in north-western Siberia. The project is in the exploration phase, with no production.

Shell is one of five energy companies which is providing financing and guarantees for up to 10% of the estimated €9.5 billion total cost of the Nord Stream 2 project.

Shell's move comes on the heels of supermajor BP announcing its own exit from Russia on Sunday and Norwegian energy giant Equinor followed suit earlier on Monday.