Shell has agreed to sell almost 400 of its petrol outlets in Russia to Lukoil, the country’s second largest oil company. Shell Neft, the company’s Russian business, will be sold for an unknown amount.

Following Russia’s invasion of Ukraine, many Western oil and gas companies have been trying to sell their Russian operations.

The transaction, which includes 411 gas stations, will protect 350 jobs, according to Shell.

A lubricants mixing factory located 200 kilometres north of Moscow is also included in the offer. After state-owned Rosneft, Lukoil is Russia’s largest oil producer.

Because of the invasion of Ukraine, Shell said in February that it would sell its Russian interests.

It announced record quarterly profits earlier this month, as energy companies continue to benefit from rising oil and gas prices.

Shell made $9.13 billion in the first three months of this year, nearly tripling its $3.2 billion profit from the same period last year.

However, the company claimed that exiting Russian deals cost them $3.9 billion, including the selling of its holdings in all joint ventures with Russian state energy company Gazprom.

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

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

Energy companies were put under immediate pressure as the conflict in Ukraine erupted, as countries declared bans and restrictions on Russian oil and gas in the weeks following the invasion.

BP maintains a major share in Russian energy giant Rosneft, but it declared the enterprise will be split up just days after the war began.

Following suit, Shell, ExxonMobil, and Equinor announced plans to reduce their Russian interests in response to shareholder, government, and public pressure.

Total Energies, another major Russian participant, has stated that it will not fund new projects in the country, but will not divest existing investments, unlike its peers.

After the United States and Saudi Arabia, Russia is the world’s third largest producer.

According to the Centre for Research on Energy and Clean Air, despite widespread sanctions and several nations lowering their reliance on Russian oil, Russia has nearly doubled its monthly earnings from supplying fossil fuels to the EU.

Since the start of the war, the EU has imported roughly €22 billion ($23 billion) in fossil fuels each month from Russia, compared to an average of about €12 billion ($12.5 billion) per month in 2021.

(Adapted from FT.com)

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