Shell expects Russia to conclude sale of 27.5% Sakhalin Energy stake in Q1

MOSCOW. Oct 27 (Interfax) - Shell (SPB: RDS.A) expects the Russian government to complete the sale of a 27.5% stake in Sakhalin Energy LLC in the first quarter of 2023, the oil and gas major said in a report.

Russia-based Sakhalin Energy LLC is the new operator of the Sakhalin 2 offshore oil and gas project, replacing Bermuda-based Sakhalin Energy. The project is being carried out under a production sharing agreement.

Shareholders of the Bermuda-based Sakhalin Energy were supposed to confirm their desire to continue to be a shareholder of the new operator. Japan's Mitsubishi and Mitsui did so, but Shell refused.

Shell officially notified Russia on September 1 that it would not apply for a stake in the new company, that it objected to the proposed move from Sakhalin Energy to the new company and that it retained all rights and means of legal protection, the report said.

Russia is expected to begin the process of selling Shell's 27.5% (minus one share) stake and this process is expected to be concluded in the first quarter of 2023, Shell said.

The owner of the unwanted stake in the new operator can receive money for the stake only after compensation for possible damages inflicted on the project and Russia as a result of their actions.

Shell said the residual value of investment in the project as of September 30 was zero.