Russia demands over €1 billion from Shell for breach of obligations under Sakhalin-2

The Russian Prosecutor General's Office has filed a lawsuit against Shell and its seven subsidiaries, demanding more than €1 billion (equivalent to 105.7 billion rubles at the current exchange rate), News.Az reports.

The lawsuit stems from Shell's failure to meet its obligations under the Sakhalin-2 project, which was transferred under Russian jurisdiction in 2022.

According to the Moscow Arbitration Court, the lawsuit was filed on October 2, 2024, and a preliminary hearing is scheduled for December 11. If the lawsuit is successful, Shell’s frozen assets held in special accounts for its share in the Sakhalin-2 project could be seized in Russia’s favor.

The defendants in the case include Shell and its entities in the UK and the Netherlands, as well as the Russian “Shell Neftgaz Development,” which recently filed for liquidation. Third parties involved in the process include Russia’s Ministry of Energy, the government of the Sakhalin region, and Gazprom’s subsidiaries.

It’s worth noting that Shell relinquished its stake in the Sakhalin-2 project in 2022, which was subsequently sold to Gazprom. The amount Russia seeks to recover includes losses related to unpaid gas supply contracts to Germany as part of the "gas-for-rubles" scheme.

This legal battle could significantly affect Shell's financial interests in Russia, and its outcome will be critical for the country's energy sector.

News.Az