Shell moves to dissolve partnership with Rosneft

Shell Plc is seeking to dissolve its partnership with Russia's Rosneft PJSC in the Caspian Pipeline Consortium (CPC), a critical oil transport route that carries Kazakhstan's crude to the Black Sea, sources familiar with the matter have confirmed.

If the separation is successfully completed, Shell will retain its stake in the consortium independently, rather than continuing to hold it jointly with the sanctioned Russian energy giant, sources told Bloomberg.

The move comes in response to growing geopolitical pressures following Russia's invasion of Ukraine. Shell committed to gradually phasing out its operations in Russia since March 2022, aligning with the broader industry push to distance itself from Russian energy assets. While Shell is withdrawing from the joint venture with Rosneft, it has no intention of exiting the wider CPC venture, which remains an important conduit for Kazakh oil exports.

Under Russian law, President Vladimir Putin this week authoriwed Rosneft and Shell to make transactions regarding the ownership of their shares in the CPC, including potential changes in the partnership structure. However, the Kremlin has not offered further details on the authorisation, sparking speculation about the future of the project and whether it could lead to a reshuffling of shareholder stakes.

Currently, Shell holds a 7.4% stake in CPC, with 3.75% through its joint venture with Rosneft, 1.75% through direct participation, and 2% via its affiliate BG Overseas Holding Ltd. The consortium, which also includes major oil firms such as Chevron and ExxonMobil, is crucial for the export of Kazakh oil to international markets via Russia. However, the participation of sanctioned Russian oil producers, including Rosneft and Lukoil PJSC, has raised concerns among international stakeholders.

By Sabina Mammadli