Shell’s retail business sold in Russia to Lukoil

400 of energy giant Shell’s service stations have been sold to Russia’s second largest producer, Lukoil. The amount of the Shell Neft sale is not disclosed. Lukoil is Russia’s largest oil producer after state backed Rosneft. In February Shell announced the sale of its assets because of the invasion of Ukraine.

The invasion of Ukraine has led to the sale of many Western oil and gas companies in Russia. The deal, which includes 411 service stations, will protect 350 jobs, says Shell.  The sale also includes a lubricant blending plant about 200km northwest of Moscow.

Earlier this month it announced record quarterly profits as energy companies continued to benefit from soaring oil and gas prices. Shell made $9.13 billion in the first three months of this year, triple the $3.2 billion profit reported for the same period last year. 3.9 billion is the amount the company said it cost to exit Russian contracts, which includes the sale of its interests in all joint ventures with Russian state-owned Gazprom. Shell profits almost triple as oil prices rise. Shell to owe £3.8bn over Russia withdrawal. Windfall tax on energy companies remains an option.

“As part of the deal, more than 350 people currently employed by Shell Neft will transfer to the new owner of that business,” said Huibert Vigeveno, Shell’s downstream director.

Maxim Donde, Lukoil’s vice president of refined products sales, said, “The acquisition of Shell’s high-quality business in Russia fits perfectly with Lukoil’s strategy to develop its priority sales channels, including retail, as well as the lubricants business.”

Countries announced bans and restrictions on Russian oil and gas in the weeks following the invasion during the conflict in Ukraine. Days after the war began, the company announced that BP’s stake in Russian energy giant Rosneft would be dropped. After this announcement, those of Shell, ExxonMobil and Equinor were closely followed. They promised to reduce their investments in Russia under pressure from shareholders, governments, and public opinion.

Another major player in Russia, Total Energies, has reportedly said it will not finance new projects in the country, but unlike its peers, it does not plan to sell its existing investments.

After the US and Saudi Arabia, Russia is the world’s third largest oil producer. The country has almost doubled its monthly revenue from fossil fuel sales to the EU, despite widespread sanctions and the fact that many countries are reducing their dependence on Russian oil

The EU has imported around €22 billion (£19 billion) of fossil fuels a month from Russia since the war began as oil and gas prices have soared, compared to an average of around €12 billion (£10.2 billion) a month in 2021.

Multinationals have begun to report associated losses, having announced cuts in their business activities in Russia. The Lukoil deal is one of the earliest in which a Western company, UK-listed Shell, has been able to sell its Russian assets. Anti-monopoly approval still constrains the sale.

Read more at BBC