The global energy giant has announced selling off of its retail and lubricants business in Russia to Lukoil as the effect of the invasion of Ukraine by Russian military forces. The press release by Shell in its website indicates that the sale is expected to be completed later in the year and also subject to regulatory approval.
According to the company’s website Shell Overseas Investments B.V. and B.V. Dordtsche Petroleum Maatschappij – subsidiaries of Shell plc, signs an agreement to sell Shell Neft LLC, which owns Shell’s retail and lubricants businesses in Russia, to PJSC LUKOIL. The deal includes 411 retail stations in Russia’s Central and Northwestern regions and the Torzhok lubricants blending plant, around 200 kilometers northwest of Moscow.
Huibert Vigeveno, who is currently Shell’s DOwnstream Director, says that their priority is the well-being of their employees. Under this deal, more than 350 people that Shell Neft currently employs will transfer to the new owner of the business, which would be Lukoil. Lukoil’s Vice President for Refined Products Sales Maxim Donde comments; “
“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,”
This sale agreement of Selling retail and lubricants business sale to Lukoil conforms to Shell’s press release in early March about the company’s intentions to quit doing business in Russia and withdraw the company from all of Russia’s hydrocarbons in phases. Shell will carry these transactions out while complying with applicable laws and regulations.
Shell Neft is the subsidiary firm in Russia that will be sold for an unrevealed sum. The sale is still subject to regulatory consent by the anti-monopoly rule in Russia. The deal includes 411 petrol stations and a lubricants mixing plant located 200 km northwest of Moscow.
Earlier in February, Shell Russia already announced selling their Russian businesses due to the Russian invasion of Ukraine. This month, Shell reported record quarterly profits though all the energy firms are making massive benefits from oil and gas surging prices. During the first three months of this year, Shell made a $9.13bn profit which is an increase from its profit of $3.2bn made in the same period last year.
Other companies in the energy business such as, BP, ExxonMobil, and Equinor, also decided to cut their Russian investment due to the increasing pressure from shareholders, governments, and the public within days of starting the war.
The news of these deals, such as the exit from the Russian energy business, showed a shortage of potential buyers, thereby increasing Russia’s isolation in the commercial sectors. A few companies give those international groups looking for an exit from Russia opportunities. As a result, it becomes an adverse divestment process for them.
The company also appointed Vadim Vorobyov as acting chief executive after Alekperov took a back seat in April due to the western sanctions imposed on him after working for 30 years. While Vadim has been working at Lukoil for the past 25 years. The board is set to decide on the new chief on May 30.
- LUKOIL is one of the largest publicly traded, vertically integrated oil and gas companies globally 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 in Russia. The whole production cycle includes oil and gas exploration, production, and refining; production of petrochemicals and lubricants; power generation; marketing and distribution.
- On March 8, 2022, 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.
- Shell Neft LLC is wholly owned by Shell Overseas Investments B.V. and B.V. Dordtsche Petroleum Maatschappij.
- Shell Neft’s retail network consists of 240 sites owned by Shell, 171 sites owned by dealers (and 19 Trademark License Agreement sites out of the scope of this transaction with LUKOIL).
Epoxy Oilserv Nigeria Limited is a Shell Lubricants distributor in Nigeria and sells its products primarily through GZ Industrial Supplies and hellogenergy.com and Tikweld.com online stores in Nigeria
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