27 Oct 2022 16:26

Shell stops receiving LNG from Sakhalin-2

MOSCOW. Oct 27 (Interfax) - Shell (SPB: RDS.A) (SPB:RDS.A) has forfeited LNG deliveries from Russia under one of its two long-term contracts, the company said in a quarterly report.

Shell has two long-term LNG supply contracts with Russian entities, which are accounted as regular sales contracts. A counterparty under one of the contracts stopped receiving cargo deliveries to Shell in the third quarter of 2022, according to the report.

Shell CFO Sinead Gorman during a press conference confirmed that the company was talking about deliveries from Sakhalin-2.

Shell was a participant in the Sakhalin-2 project. President Vladimir Putin signed a decree in June "On applying special economic measures in the fuel and energy sector in connection with the unfriendly actions of certain foreign states and international organizations." According to the decree, a Russian LLC replaced Bermuda-based Sakhalin Energy Investment Company Ltd as the operator of Sakhalin-2, which is being implemented under the terms and conditions of a production sharing agreement. The new operator was registered in August and began operations.

The foreign participants in Sakhalin Energy had to confirm their desire to continue participating with the new operator, with Japan's Mitsubishi and Mitsui confirming, and Shell refusing.