Shell could be forced to abandon a £ 3bn investment in a large Russian gas plant after Vladimir Putin threatened to seize project rights.
The Kremlin has said it plans to transfer rights to the Sakhalin-2 plant in the far east of Russia to a new Russian company, invoking economic security and national interests.
Putin signed a decree issued by the Kremlin giving stakeholders a month to say whether they will take a stake in the new venture. If they refuse to register, investors may lose their money.
Shell has a 27.5% stake in the liquefied natural gas (LNG) facility. After the Russian invasion of Ukraine, Shell promised to get out of the project and said he would not invest more in Russia.
Its stake has been valued at $ 4.1 billion (£ 3.4 billion) and Shell CEO Ben van Beurden said this week that the company was making progress in its sale. According to reports, Chinese state-owned energy companies are interested in buying the stake.
Moscow will have the final say on who can join the new company.
Most of the project’s gas is used to supply Japan, and two of the country’s largest commercial houses, Mitsubishi and Mitsui, have a combined 22.5% stake in the project.
Japanese Commerce Minister Koichi Hagiuda said on Friday that the country is considering replacing Russia’s LNG imports by increasing gas from elsewhere. The decree is not expected to disrupt the short-term supply of LNG.
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Putin has been limiting gas supplies to Europe since the invasion of Ukraine. European countries have struggled to fill their gas storage facilities for fear of a complete shutdown of Russian gas supply.
Uniper, the owner of the Ratcliffe-on-Soar power plant in Nottinghamshire, said on Thursday he was in talks with the German government to get state emergency support after Russia cut its gas supply.
A Shell spokesman said: “As a shareholder, Shell has always acted in the best interest of Sakhalin-2 and in accordance with all applicable legal requirements.
“We know the decree and we are assessing its implications. We have no further comments at this stage. “