Russia's Prosecutor General's Office is seeking more than 1 billion euros ($1.09 billion) in compensation from British-based energy giant Shell for pulling out of the Sakhalin-2 liquefied natural gas joint venture in Russia's Far East in 2022, the Moscow Arbitration Court told reporters on October 15.
Shell pulls out of Sakhalin-2 liquefied natural gas (LNG) project in 2022 after Ukraine conflict. The major oil and gas development project on Sakhalin Island in Russia's Far East includes the country's first liquefied natural gas plant.
In early October, the Russian Prosecutor General filed a lawsuit against eight Shell subsidiaries, including Shell plc, Shell Energy Europe Limited, Shell Global Solutions International B.V., Shell International Exploration & Production B.V., Shell Neftegaz Development, Shell Exploration & Production Services B.V., Shell Sakhalin Services B.V. and Shell Sakhalin Holdings В.V.
“They are seeking damages of more than 1 billion euros,” the court’s press service told RIA Novosti when asked about the case.
Gazprom Export, the Russian Energy Ministry, the Sakhalin administration, as well as the companies Sakhalin Energy Investment and Sakhalin Energy were named as third parties, the court said.
In 2022, Russian President Vladimir Putin signed a decree transferring the assets of Sakhalin Energy, the former operator of Sakhalin-2, to a new Russia-based operator, Sakhalin Energy LLC.
The Russian government allowed foreign owners, including Japanese companies Mitsui and Mitsubishi, to hold shares in the new operating unit in proportion to their previous holdings.
The two Japanese companies decided to retain their stakes in the LNG project and agreed to transfer their respective 12.5% and 10% stakes to the new operator.
But Shell, which owns about 27.5% of Sakhalin Energy, said it would not take a stake in the new entity, forcing Moscow to sell its stake.
In March, a subsidiary of Russian oil giant Gazprom bought Shell's stake for 94.8 billion rubles ($973.3 million), raising the company's stake in the project to 77.5%.
The funds will be transferred to Shell in exchange for its stake in Sakhalin-2, but according to the Kommersant daily, they will be frozen in so-called "Type S" accounts.
Russia put out such accounts from the beginning of the conflict with Ukraine as a countermeasure to Western sanctions.
The main purpose of such heavily restricted accounts is to prevent entities from “unfriendly countries” from moving money out of the country.
