Chinese buyers could take Shell's Sakhalin-2 stake: press

Shell could be nearing a deal with Sinopec, CNOOC and CNPC to sell its 27.5% equity stake in the 9.6mn metric tons/year Sakhalin-2 LNG project, Reuters reported April 21.

China's big three have entered talks on acquiring the stake, in a deal that could involve one of the companies, or a partnership of multiple parties. UK-headquartered Shell had said on February 28 it would exit the Gazprom-operated LNG plant, situated in the Russian Far East, due to Moscow's actions in Ukraine. Shell has warned that the divestment could incur it an impairment of up to $5bn.

An agreement to buy shares in Sakhalin-2 could help China satiate domestic demand for LNG fuels, though none of the companies fielded Reuters' request for comment. The newswire said Shell was still open to bids from a non-Chinese buyer. Chinese LNG imports reached 79mn mt/yr last year, up from 67mn mt/yr in 2020.

Sakhalin-2 currently satisfies around 4% of the global LNG market. Its liquefaction capacity is largely taken up by deliveries to the Far East, mainly to China, Japan and South Korea. A single-train, 5mn mt/yr expansion has been mooted, though Shell pulled its investment in response to Ukraine.

The LNG plant is currently supplied by the Piltun-Asokhskoye and Lunskoye fields, which produce natural gas and oil. Gazprom has an equity stake of 50% and one share, followed by Mitsui (12.5%) and Mitsubishi (10%).