Russia's swoop on Sakhalin-2 gas plant threatens to push out big stakeholder Shell
- Russian president Vladimir Putin moved to seize the Sakhalin-2 natural gas project Thursday.
- Shell holds a 27.5% stake in the facility, located in the far east of Russia.
Russian president Vladimir Putin has moved to seize control of the Sakhalin-2 oil and gas project, threatening to push out major foreign players including Shell.
A Kremlin statement demanded that the rights to the offshore facility, which includes Russia's first liquefied natural gas (LNG) plant, be transferred to a new Russian company within 30 days. Stakeholders who don't take a stake in the new company may not be fully compensated, the statement said.
Putin is moving to take control of Russia's oil-and-gas facilities as Western nations impose a wide range of sanctions on Russian energy.
Shell holds a 27.5% stake in Sakhalin-2, but announced it would exit the project after Russia invaded Ukraine in February.
"As a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements," a Shell spokesman said. "We are aware of the decree and are assessing its implications."
A majority of the gas produced at Sakhalin-2 supplies Japan, and trading houses Mitsui and Mitsubishi own a combined 22.5% stake in the project. While Japan has imposed sanctions on Russia since Putin's invasion, its prime minister said in March that the country does not intend to withdraw from Sakhalin-2.
"Our interest must not be undermined," Japan's deputy chief cabinet secretary, Seiji Kihara, said in a Friday briefing addressing Putin's seizure of the oil-and-gas facility.
Shell shares slipped 0.6% after the Kremlin issued its decree. Mitsui and Mitsubishi plunged 5.5% and 5.4% respectively in Japanese trading hours.