Three Chinese energy firms are in talks to buy Shell's stake in a huge Russian natural gas export project, a report says

According to people with knowledge of the matter, three Chinese state-run energy companies are in talks to buy Shell's stake in a huge Russian natural gas export project.

The people said that CNOOC, CNPC, and Sinopec were in talks with the Anglo-Dutch oil and natural gas giant over its holding in the Sakhalin-2 liquefied natural gas venture.

The sources said that the discussions were at an early stage and could still fall through. One of the sources said that Shell was open to talks with potential buyers outside of China.

Japan, South Korea, and China are the main customers for Sakhalin-2 gas, according to Shell. Russian state-owned energy giant Gazprom has a 50% stake in the venture.

Shell, CNOOC, CNPC, and Sinopec did not respond to the request for comment.

According to the International Energy Agency, Russia supplies around a third of the EU and UK's total natural gas demand in 2021. The agency said that it is the world's third largest oil producer and the second largest crude oil exporter.

The outbreak of the conflict and the ensuing package of international sanctions, designed to force Russian President Vladimir Putin to abandon the invasion, have led some Western oil firms to stop operations in Russia. China has continued buying energy supplies from Russia.

Shell said on February 28 that it would limit business with Russia, as well as pulling out of the Nord Stream 2 natural gas project. It said that it would close all of its service stations in Russia and write off up to $5 billion in assets because it was withdrawing from the Russian oil and natural gas sector.

In addition, the British oil company said it would dump its stake in the Russian oil company. According to sources, CNPC and Sinopec were among the state-backed firms that were reached out to by BP to sell the stake.

ExxonMobil announced that it would stop operations at the Sakhalin-1 oil and gas venture, a project it operates on behalf of an international consortium of Russian, Japanese, and Indian companies.

The European Commission said it could reduce EU demand for Russian gas by two-thirds by the end of the year under a plan to diversify supplies.