Shell Neft to be sold to PJSC Lukoil 'later this year'

Shell Neft is to be sold to PJSC Lukoil and the sale is expected to be completed later this year, subject to regulatory approval, according to a company statement.

Shell Overseas Investments B.V. and B.V. Dordtsche Petroleum Maatschappij – subsidiaries of Shell – signed the sales agreement involving Shell Neft, which owns Shell’s retail and lubricants businesses in Russia. Details of the sale were not disclosed.

On March 8, Shell announced its intent to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner.

It followed Shell's board announcing at the end of February its intention to exit its joint ventures with Gazprom and related entities, including its 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.

The latest deal includes 411 retail stations, mainly located in the Central and Northwestern regions of Russia, and the Torzhok lubricants blending plant, around 200kms north-west of Moscow. 

Shell Neft’s retail network consists of 240 sites owned by Shell, 171 sites owned by dealers (and 19 Trademark License Agreement sites which are out of the scope of this transaction with Lukoil).

“Our priority is the well-being of our employees,” said Huibert Vigeveno, Shell’s Downstream Director. “Under this deal, more than 350 people currently employed by Shell Neft will transfer to the new owner of this business.”

The acquisition of Shell’s 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.

The agreement with LUKOIL follows Shell’s announcement in early March of its intention to withdraw from all Russian hydrocarbons in a phased manner, and will be carried out in full compliance with applicable laws and regulations.

Lukoil is one of the largest publicly traded, vertically integrated oil and gas companies in terms of proved hydrocarbon reserves and production; and the second largest producer of crude oil in Russia.

Established in 1991, Lukoil currently operates globally with core upstream assets located in Russia. The full production cycle includes oil and gas exploration, production and refining; production of petrochemicals and lubricants; power generation; marketing and distribution.