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Shell in talks with Chinese state

firms for Sakhalin stake

INVESTMENT CHINA’S three largest state oil companies are Neft at the Salym Petroleum oil development in
reportedly in talks to acquire Shell’s position at Western Siberia. But first it must find a buyer,
the Sakhalin-2 oil and LNG project in the Rus- and there is scepticism about how Western
sian Far East. majors can realistically leave the country with-
According to the UK Telegraph newspaper, out divesting their shares at a discounted rate to
Shell is discussing the sale of its 27.5% holding Russian companies.
in the project to China’s state-run CNOOC, Sakhalin-2 satisfies about 4% of the global
CNPC and Sinopec. The project is operated by LNG market, fed with feedstock from the Pil-
Gazprom, while other investors include Japan’s tun-Asokhskoye and Lunskoye fields off the east
Mitsui and Mitsubishi. coast of Sakhalin Island. Most of its exports go to
Shell is still open to talks with buyers outside China, Japan and South Korea.
China, however, and a source told Reuters that Mitsui and Mitsubishi have ruled out divest-
Chinese energy firms were following Beijing’s ing from Sakhalin-2, arguing that such a move
instruction to be cautious when making new would only result in Chinese investors taking
investments in Russia because of sanctions and their place. The reported talks between Shell and
the general political fallout from Moscow’s inva- Chinese firms have sparked concerns in Japan
sion of Ukraine. about whether the LNG supplies it gets from the
“The communication between Chinese com- plant might be jeopardised if China becomes a
panies and Russia at this point only focuses on key shareholder and diverts shipments to its own
trade and development of new projects,” the market.
source said, claiming that the takeover of projects There is also speculation that the reliable
abandoned by Western firms was not on Beijing’s operation of Sakhalin-2 might be at risk if Shell
agenda. A source at CNPC also said that Chinese departs. It was the Anglo-Dutch major that led
companies were unlikely to target Shell’s position the development of the project, with Gazprom
at Sakhalin 2. only taking its place as operator when the plant
Shell declared on February 28 that it was leav- was nearly complete. Gazprom does not oper-
ing Russia, including Sakhalin LNG and its other ate any other liquefaction facilities, and has had
joint ventures in Russia, including with Gazprom difficulty developing such projects on its own.™

P10 www. NEWSBASE .com Week 17 29•April•2022