Russian President Vladimir Putin has already outlined his energy battle lines in Europe. On Friday he added Asia. Russia will do it Force Ownership of its natural gas project Sahlin-2 into a local entity, threatens investments by foreign groups including Shell and Japanese trading companies. This is a shot beyond the arcs of energy producers trying to negotiate exits from Russia.
Putin has previously threatened retaliation for unfriendly foreign groups. But the move on Sakhalin-2 is the first clear attempt at nationalization. Driven by what Russia claims is the threat of an “environmental emergency,” the logical appropriation from the point of view of the host country.
Russia does not want Shel to remain a Phantom shareholder, with no capital or operational expertise. Since March, ExxonMobil has stopped working at the nearby Sakhalin-1, where it owns 30% and operates. Oil and gas production there fell by about 80%.
The move appears to have less to do with attacking Japanese investors Mitzui and Mitsubishi, which together own 22.5 percent. They both said they wanted to continue as customers. Russian liquefied natural gas makes up almost a tenth of Japan’s needs.
Shell is well aware of the risk. In its first-quarter results, it downgraded more than half of its previous $ 3 billion book value for Sakhalin-2. Most brokerage analysts will not have much in their financial models for the project. Jeffries puts the value at 20p at a share price of 21.68 pounds. For Bernstein it is less than 2% of ebitda next year. Shell shares rose on the day.
But if Shell had hoped to sell its stake, for example, Chinese oil producers like Cnooc or CNPC, Which now seems much more difficult. BP, which owns one-fifth of state-owned Rosneft, and Total Energies of France, which has large investments in Russia’s gas fields, have much to ponder. Expect more property hijackings.
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Russia/Sakhalin-2: nationalisation sends message to Shell and its peers Source link Russia/Sakhalin-2: nationalisation sends message to Shell and its peers