The Russian Prosecutor General's Office is seeking more than €1 billion (US$1.09 billion) in damages from UK-based oil giant Shell for withdrawing from 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 withdrew from the Sakhalin-2 liquefied natural gas (LNG) project in 2022 after the outbreak of the Ukrainian conflict. The major oil and gas development project on the 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 8 companies of Shell, including Shell plc, Shell Energy Europe Limited, Shell Global Solutions International B.V., Shell International exploration & Production B.V., Shell Neftgaz 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 department told RIA Novosti when asked about the case.
Gazprom Export, the Russian Energy Ministry, Sakhalin government, as well as Sakhalin Energy Investment and Sakhalin Energy companies 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 operator based in Russia, Sakhalin Energy LLC.
The Russian government allowed foreign owners, including Japanese companies Mitsui and Mitsubishi, to hold shares in the new operator at their previous holding ratio.
The two Japanese companies decided to retain their shares in the LNG project and agreed to transfer 12.5% and 10% of their corresponding shares to the new operator.
But Shell, which owns about 27.5% of Sakhalin Energy, said it would not hold a stake in the new unit, prompting Moscow to sell its stake.
In March, a subsidiary of Russian oil and gas giant Gazprom bought a shares of Shell for 94.8 billion rubles ($973.3 million), raising the company's stake in the project to 77.5%.
The money will be transferred to Shell in exchange for the company's shares in Sakhalin-2, but according to the Kommersant daily, they will be frozen in a so-called " Type S" account.
Russia has introduced such accounts since the start of the conflict with Ukraine as a response to Western sanctions.
The main purpose of such strictly restricted accounts is to prevent entities from "unfriendly countries" from transferring money out of the country.
