6 May 2022 19:40

Shell to suspend operations of filling stations, lubricants plant in Russia for sale process

MOSCOW. May 6 (Interfax) - Shell (SPB: RDS.A) plc, which is leaving the Russian market, has confirmed it is in talks to sell its sales and distribution assets in the country.

The company published a comment by Sergei Starodubtsev, head of Shell Neft LLC, who said that "in line with Shell's previously announced intention to withdraw from projects in the Russian oil and gas market, we can confirm that negotiations are currently being held to sell Shell Neft LLC, which owns the filling stations network and lubricants plant in Torzhok."

The operations of Shell filling stations and the lubricants plant will be temporarily suspended in the next few days in order to ensure the sale of Shell Neft LLC to the new owner," he said.

"Shell's key priority remains the safety of our employees and production processes, preserving jobs and compliance with Russian legislation," the company said.

Reports had said Shell was in talks to sell its retail assets, with sources telling Forbes that Lukoil is the most likely buyer.

Lukoil is not commenting on this information.

"We confirm that talks are currently underway to sell the company Shell Neft, owner of a network of filling stations and a lubricants plant in the city of Torzhok," Shell told Interfax earlier. "We are unable to provide more detailed information on the talks at this time," Shell said.

Forbes said, citing sources, on May 5 that employees of Shell's Russian office were told that the company had found a buyer for its filling station business. No deal has been signed yet, as the parties are in the negotiating process, a source told Forbes.

Shell is selling all its filling stations, keeping their employees on board under the condition that their salaries are maintained at the same level until the end of the year, the source said. That Russian employees have been told about the sale has been confirmed by another fuel market player. Shell employees were not told who the buyer is, the source said.

According to the source, several players have looked at Shell's business, including Lukoil. Lukoil is considered by Shell's Russian office to be the most likely buyer, an employee said.

One source notes that Shell wants to sell its lubricants plant along with its debts together with its fillings stations. According to the company's 2021 financial statement, Shell Neft LLC, which has the fillings stations and lubricants plant, has 9 billion rubles in debt.

Shell wrote off $358 million in non-current assets and $236 million in other expenses on marketing assets in its financial report for the first quarter.

Shell's network of filling stations in Russia includes more than 370 stations in 28 cities, including St. Petersburg and the Leningrad region, Moscow and the Moscow region, the Vologda, Volgograd, Voronezh, Kostroma, Lipetsk, Ryazan, Rostov, Tver, Tula, Kemerovo, Novosibirsk, Samara, Smolensk, Kaluga, Novgorod, Bryansk, Yaroslavl, and Ulyanovsk regions, the Krasnodar Territory, and the Republic of Tatarstan.

Shell launched a lubricants plant in Torzhok in 2012 and announced plans last year to increase its capacity from 200 million to 300 million liters of lubricants per year.