Shell in talks with Indian co to sell Russian LNG plant stake
India has stepped up purchases of Russian oil, taking advantage of big discounts
LONDON: Shell is in talks with a consortium of Indian energy companies to sell its stake in a major liquefied natural gas (LNG) plant in Russia, said three people aware of the development, highlighting India’s willingness to step into the space left by western companies following the outbreak of the RussiaUkraine war.
The world’s third-largest oil importer has stepped up purchases of Russian oil since the conflict began in February, taking advantage of big discounts at a time that global oil prices have surged.
Shell has recently entered into talks with a group of Indian companies, including ONGC Videsh and Gail, over its 27.5% stake in the Sakhalin-2 LNG plant on Russia’s eastern flank, said the people mentioned above.
Shell declined to comment. ONGC, Gail and other state-run Indian companies did not respond to requests for comment.
The talks follow the British company’s plan to exit all Russian operations, amid an exodus of western companies from the country in response to sanctions over the Ukraine conflict. India has not explicitly condemned Russia’s actions there.
India has snapped up cheap Russian oil, taking its share of oil exports by that country to around 10% from zero since the start of this year, according to the International Energy Agency. The Union government has also asked state-run energy companies to look into buying Russian assets from European oil majors including BP.
India has shrugged off criticism from the West and defended its Russian energy purchases, saying they represent a fraction of the country’s overall needs and a sudden halt to imports would push up prices for consumers.
Shell is also asking the Indian group for separate bids for longterm deals it has with Sakhalin-2 to supply the consortium with LNG cargoes and crude oil, two of the people mentioned above said.
India does not purchase much LNG from Russia. However, it aims to increase sharply its gas consumption over the coming decades.
It was unclear if the talks between Shell and the Indian consortium will lead to a deal, whose value remains unclear after Shell took a writedown on its Russian assets. The world’s largest LNG trader wrote down $3.9 billion on Russian assets after its decision to leave.
Any sale agreement would also require Russia’s approval, said the people mentioned above.
Shell is not in talks with other companies, including Chinese energy groups, on selling the Sakhalin-2 stake, one of the people said.
Sakhalin-2 is controlled and operated by Russian gas company Gazprom. Other stakeholders in the project include Japan’s Mitsui & Co and Mitsubishi Corp.
Shell earlier this month agreed to sell its Russian retail and lubricants businesses to Lukoil.
Russia calls its invasion of Ukraine a “special military operation” to rid the country of fascists, which Kyiv and its Western allies say is a pretext for an unprovoked war.