Royal Dutch Shell (LON:RDSA) is in talks to buy a stake in an oil and gas project in Russia from Gazprom Neft, Reuters has reported. The potential deal would mark a rare foray into Russia’s energy sector by a Western oil major since sanctions were imposed.
Shell’s share price has climbed higher in London in today’s session, having gained 0.57 percent to 2,648.00p as of 08:30 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.07 percent lower at 7,506.51 points. The group’s shares have added just under a fifth to their value over the past year, as compared with about a 2.6-percent gain in the Footsie.
Shell in talks with Gazprom Neft
Sources with knowledge of the matter told Reuters that Shell was in talks with Russia’s third-largest oil producer Gazprom Neft about acquiring a stake in the onshore Tazovskiy project in the country’s northern Yamal region. One of the sources indicated to the newswire that the Anglo-Dutch group was interested in acquiring around 50 percent of the Tazovskiy project, while the aim was to conclude the deal by year-end.
“For Gazprom Neft, it’s a chance to raise quick money, while for Shell – to get cheap reserves,” the source explained.
Possible return to Russia
Should the deal go ahead, it would mark a return for Shell to making new investments in Russia, which has been under Western sanctions since 2014 following its annexation of Crimea. Reuters notes that while Gazprom Neft is subject to the US government’s sectoral sanctions, which limit its ability to raise funds abroad, it is not on the US Treasury Department’s Specially Designated Nationals list, which bars US entities from doing business with any firm on the list.