Shell Sells Russian Petrol Stations To Lukoil

Law360, London (May 12, 2022, 3:37 PM BST) -- Energy giant Shell said Thursday that it has agreed to sell its Russian arm to Moscow-based multinational Lukoil PJSC, becoming the latest company to withdraw from the country following the invasion of Ukraine.

The sale is of Shell Neft LLC, which owns the Anglo-Dutch company's 411 petrol stations and its lubricant factory in Torzhok, near Moscow. Neither company specified when the sale would be completed, and financial details of the deal were not disclosed.

"Our priority is the well-being of our employees," Huibert Vigeveno, a Shell director, said. "Under this deal, more than 350 people currently employed by Shell Neft will transfer to the new owner of this business."

Shell said earlier this month when it reported its first-quarter results that it had taken a $3.9 billion post-tax charge against earnings due to its withdrawal from Russia, which included exiting equity partnerships with Gazprom, the Russian energy giant.

These projects included Shell's 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% holding in the Salym Petroleum Development and the Gydan energy venture. The company said it also will end its involvement in the Nord Stream 2 project to build a pipeline from Russia to Germany.

"The acquisition of Shell's high-quality businesses in Russia fits well into Lukoil's strategy to develop its priority sales channels, including retail, as well as the lubricants business," said Maxim Donde, a Lukoil vice-president.

Lukoil's long-standing president and board chairman Vagit Alekperov stepped down after being personally hit with U.K. sanctions on April 13. Alekperov had led the company since it was privatized in 1993 following the collapse of the Soviet Union.

Shell Neft is currently wholly owned by Shell Overseas Investments BV and Dordtsche Petroleum Maatschappij BV.

The company did not comment on its legal counsel when approached. Lukoil, Russia's second largest oil company, did not immediately respond to a request for information about its counsel.

Shell is the second largest U.K. oil group to exit the country since the start of the country's war against Ukraine. BP PLC reported a $24.4 billion post-tax charge against earnings on May 3 due to the sale of its 19.75% stake in Russian oil company Rosneft PJSC.

The U.K. has repeatedly slapped sanctions on key Russian industries — including oil — since its troops crossed Ukraine's borders, including Monday's dramatic rise of tariffs on imported Russian precious metals. 

The European Union also imposed a phased embargo on Russian oil last week, with the aim of cutting the Kremlin off from the bloc's energy market by the end of the year. 

--Additional reporting by Joel Poultney. Editing by Joe Millis.

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