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Russia: Shell targeted by a lawsuit over its activities in Sakhalin

Russia has filed a lawsuit against several Shell entities for energy projects on Sakhalin Island. This initiative could reflect an attempt to consolidate national resources after the company’s withdrawal in 2022.

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The lawsuit filed by the Office of the Prosecutor General of Russia against several Shell entities, revealed by documents from the Moscow Arbitration Court, targets eight units of the British energy company. Among these are Shell Global Solutions International B.V., Shell Exploration and Production Services B.V., Shell International Exploration and Production B.V., and Shell Sakhalin Services B.V. UK-based subsidiaries as well as Shell Neftegaz Development LLC in Russia are also among the defendants.

The lawsuit also involves several third parties, such as Gazprom Export, the Russian Ministry of Energy, Sakhalin Energy LLC, and the government of the Sakhalin region, indicating broad support for this legal initiative from regional and national authorities.

Shell’s withdrawal and strategic impact

This case seems to be set against the backdrop of Shell’s withdrawal from the Russian market in 2022, following the invasion of Ukraine. Before its withdrawal, Shell held significant stakes in strategic energy projects, including the Sakhalin-2 liquefied natural gas (LNG) plant, managed by Gazprom. In response to Western sanctions, Russia tightened its control over this facility, which accelerated Shell’s decision to leave the country and disengage from projects such as Nord Stream 2.

Objective and geopolitical context

The precise objective of this lawsuit remains unclear, as no details on the reasons or compensations demanded have been specified. However, it is likely an attempt by Russia to regain full control of energy assets once held by Shell and to consolidate its position in the energy sector after the departure of Western companies.

Consequences for energy relations

Strategically, this initiative could be seen as a direct response to international economic sanctions. It also demonstrates Russia’s willingness to protect its national resources. The tense geopolitical context and the strategic importance of Sakhalin Island, rich in energy resources, make this case particularly sensitive for commercial and energy relations between Russia and the remaining foreign companies.

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