You are here
J2. Fossil Fuel Industry
THE SHELL LEAKS FILES: 10 OCTOBER 2026
Archive reference: SLF-2007-083
Collection: The Sakhalin Papers
Principal authenticated records: Gazprom corporate announcement of 30 September 2014; Gazprom–Shell memorandum-roadmap of 23 February 2014; Royal Dutch Shell plc Annual Report and Form 20-F 2014, filed with the US Securities and Exchange Commission on 12 March 2015; Gazprom corporate records concerning Sakhalin III.
Contemporaneous reporting: Reuters, 30 September 2013; Argus Media, 1 October 2014; LNG Industry, 1 October 2014; Reuters and Interfax reporting on Shell’s Russian operations during September 2014.
Government and judicial records: US Treasury sanctions announcements of 16 July and 12 September 2014; EU Council Regulation 833/2014; Court of Justice of the European Union, Rosneft v HM Treasury, Case C-72/15, judgment of 28 March 2017.
Evidence standard: Corporate announcements establish meetings and publicly expressed intentions, not undisclosed negotiations or final investment decisions. Shell’s SEC filing provides authenticated retrospective evidence of how sanctions affected its operations in 2014. Contemporary industry interpretations are attributed to their publishers. The subsequent European judgment is used to explain the legal framework, not to imply wrongdoing by Shell.
Introduction: The September meetingThe previous instalment, SLF-2007-082, established that Shell’s commercial relationship with Gazprom survived the first major escalation of Western sanctions following Russia’s annexation of Crimea.
On 23 May 2014, Ben van Beurden and Alexey Miller had met at the St Petersburg International Economic Forum.
They discussed the possibility of expanding Sakhalin II, Russia’s first liquefied natural gas project.
By September, circumstances had deteriorated significantly.
The destruction of Malaysia Airlines flight MH17 over eastern Ukraine had further damaged relations between Russia and the West.
Washington had imposed additional restrictions on Russian financial institutions and energy companies.
The European Union had introduced its own sectoral sanctions.
And on 12 September, the United States had expanded measures restricting technology and services associated with certain Russian oil-development activities.
Yet eighteen days later, Shell’s chief executive was meeting Gazprom’s chairman again.
This time, there was a particularly revealing detail in the official announcement.
Gazprom did not merely say that the companies intended to maintain their existing relationship.
It publicly welcomed the prospect of increasing LNG production.
The meeting occurred against a background in which parts of Shell’s wider Russian exploration portfolio were becoming subject to restrictions.
The documentary record therefore presents two developments that must be understood together.
One Shell venture was being positioned for expansion.
Other Shell activities were being suspended because of sanctions.
There was no inherent legal contradiction between those positions.
But their coexistence reveals the increasingly complicated commercial landscape Shell was navigating.
1. The primary document: 30 September 2014The central record is a Gazprom corporate announcement published at 18:15 on 30 September 2014.
Its headline was:
“Gazprom and Shell approve Sakhalin II potential capacity creep.”
The announcement identifies a working meeting at Gazprom’s headquarters between Alexey Miller, chairman of Gazprom’s Management Committee, and Ben van Beurden, chief executive of Royal Dutch Shell.
Gazprom stated that the executives discussed current and future bilateral cooperation, concentrating particularly on LNG production at Sakhalin II.
The announcement described both companies positively assessing their joint efforts and recognising substantial potential to increase LNG output.
It also recalled the February 2014 memorandum-roadmap covering engineering preparations for a proposed third LNG train.
The document is preserved on Gazprom’s official website.
Gazprom: 30 September 2014 meeting announcement
This is important primary evidence.
It authenticates the meeting, identifies the participants and records the subjects Gazprom publicly acknowledged discussing.
But there are limitations.
The announcement does not disclose the full conversation.
It contains no transcript of the executives’ private exchanges.
It does not identify an approved project budget.
It does not announce a final investment decision.
And it does not say that the third LNG train had received every necessary construction approval.
Those distinctions are particularly important because Gazprom’s headline could easily be mistaken for evidence of a completed investment decision.
It was not.
2. What did “capacity creep” actually mean?Gazprom’s choice of terminology deserves attention.
In LNG operations, capacity creep generally refers to incremental increases in production capability achieved through improvements to an existing facility.
Such improvements might involve equipment modifications, debottlenecking or operational optimisation.
That is different from constructing an entirely new LNG production train.
Sakhalin II already possessed two operating trains at Prigorodnoye.
Their original combined design capacity was approximately 9.6 million tonnes of LNG annually.
Gazprom’s own figures showed that the plant had exceeded that capacity.
In 2013, Sakhalin II produced approximately 10.8 million tonnes of LNG.
The original plant was therefore already performing beyond its nominal design specification.
Gazprom’s September announcement used the language of increasing capacity while also referring to the proposed third train.
The two possibilities should not be confused.
Further optimisation of the existing plant could provide incremental production gains.
A third train represented a substantially larger investment requiring additional gas, engineering, construction and financing.
The September announcement established enthusiasm for greater LNG production.
It did not, by itself, establish which specific expansion measures had received final approval. Gazprom
3. The third train was still the larger ambitionThe proposal for a third LNG train was not new.
On 23 February 2014, van Beurden and Miller had signed a memorandum-roadmap in Sochi.
That document provided for the preparation of front-end engineering and design documentation.
FEED is a significant stage in major industrial-project development.
It establishes the technical design basis, refines cost estimates and supports subsequent investment decisions.
But completing or commissioning FEED is not the same as authorising construction.
Nor does it guarantee that a project will proceed.
Gazprom had publicly welcomed the prospect of increasing LNG supplies to Asia.
Van Beurden had emphasised Sakhalin II’s role as a reliable LNG supplier to the Asia-Pacific market.
Both companies had strong commercial incentives.
Sakhalin II already possessed an operating plant, export infrastructure, customers and an established production history.
Expanding an existing complex could potentially be more attractive than developing an entirely new LNG project.
But a third train required something that the two existing trains did not necessarily have available in sufficient quantities:
additional gas reserves capable of sustaining decades of increased LNG production.
That question would become central to the expansion debate.
Gazprom: February 2014 third-train roadmap
4. Argus identifies the sanctions connectionA particularly useful contemporary report appeared on 1 October 2014.
Industry publication Argus Media reported the previous day’s meeting under the headline:
“Gazprom backs Sakhalin 2 LNG expansion.”
Argus connected the renewed attention to Sakhalin II with the difficulties sanctions were creating for Gazprom’s proposed Vladivostok LNG project.
The report discussed a prospective third Sakhalin train of approximately 5 million tonnes annually.
It also raised the possibility that restrictions on access to US technology could strengthen Gazprom’s incentive to rely upon Shell’s LNG technology and experience.
This is an important contemporary interpretation.
It suggests that Western sanctions could have had differing effects across Gazprom’s project portfolio.
They might impede one proposed development while making another, involving an established Western partner and an existing operating complex, comparatively attractive.
But this remains Argus’s industry analysis.
The article does not establish that Gazprom’s internal management formally cancelled or redirected a project because of sanctions.
Nor does it prove that Shell supplied technology in violation of restrictions.
The report also discussed the need for additional gas supplies from the South Kirinsky area of Sakhalin III.
And it indicated that a final investment decision remained a future event.
That last detail is essential.
On 1 October 2014, the third train was still an investment proposal, not an approved construction project.
Argus Media: Gazprom backs Sakhalin 2 LNG expansion, 1 October 2014
The LNG Industry publication independently reported the Miller–van Beurden meeting on the same date, confirming the emphasis on increasing LNG production.
LNG Industry: Gazprom and Shell discuss Sakhalin LNG expansion
5. The missing gas: why Sakhalin III matteredSakhalin II was an established producing project.
Sakhalin III was a separate group of exploration and development licences controlled by Gazprom.
That distinction is fundamental.
Sakhalin II’s existing production came primarily from the Piltun-Astokhskoye and Lunskoye fields.
Gazprom’s Sakhalin III interests included the Kirinsky block and fields such as Kirinskoye and Yuzhno-Kirinskoye, also known as South Kirinsky.
These resources were potentially important because expansion of the LNG plant required reliable additional feed gas.
The problem had been publicly discussed before the 2014 political crisis.
On 30 September 2013, Reuters reported that Olivier Lazare, then head of Shell’s Russian operations, had urged Gazprom to move more quickly on LNG expansion.
Lazare warned that delays could cause the partners to miss favourable Asian LNG market opportunities.
Reuters identified the availability and allocation of additional gas as a significant obstacle.
Potential supplies from Sakhalin III were already under consideration.
But Gazprom had other plans for its gas resources, including domestic supply and wider eastern Russian infrastructure.
The issue was therefore not simply whether gas existed.
It was whether sufficient gas could be commercially and contractually committed to Sakhalin II.
The Reuters report was preserved contemporaneously in the Donovan archive.
Reuters: Shell warns Gazprom of price risks as LNG expansion delayed, 30 September 2013
This provides important continuity.
The disagreement over expansion did not originate with Western sanctions.
The underlying commercial and resource-allocation problem existed earlier.
Sanctions subsequently complicated the environment in which that problem had to be resolved.
6. Gazprom had already demonstrated the technology challengesGazprom’s own October 2013 announcement concerning the Kirinskoye field illustrates the technical complexity of developing additional offshore gas resources.
The company described the testing of Russia’s first subsea production facility at Kirinskoye.
The field was located approximately 28 kilometres offshore in the Sea of Okhotsk.
Its development required subsea equipment operating beneath waters subject to severe seasonal conditions.
Gazprom described a subsea production system installed at approximately 90 metres depth.
The company’s announcement also identified the wider Kirinsky block and ongoing exploration at Yuzhno-Kirinskoye.
The projected design output of Kirinskoye was approximately 5.5 billion cubic metres of gas annually.
That figure must not be confused with an approved gas supply to Sakhalin II.
Gazprom’s announcement described a producing-field development and the wider regional gas infrastructure.
It did not establish that the field’s production had been contractually allocated to Shell’s proposed third LNG train.
Nevertheless, the record demonstrates why offshore technology, infrastructure and resource allocation were significant issues.
The additional gas did not merely need to be found.
It had to be developed, produced, transported and made commercially available.
Gazprom: Kirinskoye subsea production facility, 23 October 2013
7. Shell’s own SEC filing reveals what sanctions had already stoppedThe most important new evidence in this instalment comes from Shell itself.
On 12 March 2015, Royal Dutch Shell plc filed its Annual Report and Form 20-F for the year ended 31 December 2014 with the United States Securities and Exchange Commission.
This is an authenticated corporate filing.
It was published after the events examined here, but it reports Shell’s operations during 2014.
In the Russia section of its Upstream review, Shell confirmed that sanctions had affected its activities.
The company stated:
“As a result of EU and US sanctions prohibiting defined oil and gas activities in Russia, in 2014 we paused our liquids-rich shales exploration activities”
Shell identified the relevant operations as activities being undertaken through Salym and Khanty-Mansiysk Petroleum Alliance V.O.F.
This is unusually significant.
It is not a newspaper’s interpretation of an anonymous source.
It is not an allegation from an activist or campaign organisation.
It is Shell’s own statement in a document filed with a securities regulator.
It establishes that the 2014 restrictions had actual operational consequences for parts of Shell’s Russian portfolio.
Those consequences should not be exaggerated.
Shell did not say in this passage that sanctions had required it to close Sakhalin II.
It did not say that all its Russian exploration activities had ceased.
It identified particular liquids-rich shale-exploration activities that had been paused.
The distinction is precisely what makes the record valuable. SEC
8. The contrast with Sakhalin IIElsewhere in the same annual report, Shell recorded its continuing position in Sakhalin II.
The company confirmed that it held a 27.5 per cent interest.
It described Sakhalin II as an integrated oil and gas project.
According to Shell’s own figures, the project produced approximately 320,000 barrels of oil equivalent per day in 2014, measured on the project’s total production basis.
The company also confirmed that LNG output exceeded 10 million tonnes.
In its list of operating liquefaction plants, Shell recorded Sakhalin LNG at Prigorodnoye with a capacity of 9.6 million tonnes annually.
The proposed third train was not listed among Shell’s LNG plants under construction in that report.
These figures support several conclusions.
First, Sakhalin II remained operational throughout the sanctions crisis of 2014.
Second, Shell continued to hold a substantial minority interest.
Third, the existing LNG operation had not been shut down by the sanctions measures discussed here.
Fourth, the third train remained a prospective development rather than an operating facility or an identified construction project.
Most importantly, the same SEC filing that confirmed the suspension of Russian shale exploration also confirmed the continuation of Sakhalin II production.
That is the central documentary contrast.
Shell was suspending some Russian activities while maintaining others. SEC
9. Why the legal distinction matteredThe restrictions introduced in 2014 were not a comprehensive prohibition on all Russian energy trade.
They were targeted measures.
Some concerned access to financing.
Others restricted particular goods, services and technologies associated with designated Russian energy companies or specified categories of oil development.
On 12 September 2014, the US Treasury expanded sectoral sanctions affecting Russian energy activities.
Its Directive 4 addressed certain deepwater, Arctic offshore and shale projects with the potential to produce oil.
The restrictions were concerned with the application of specified technology, goods and services to those projects.
The measures therefore distinguished between different activities.
An existing LNG plant processing gas from established fields was not automatically equivalent to a new shale-oil exploration project.
Nor was every transaction involving Gazprom legally identical to every transaction involving Gazprom Neft or another Russian company.
Company identity, ownership, project location, activity, technology, financing arrangements and applicable jurisdiction all mattered.
This helps explain how Shell could lawfully continue certain operations while suspending others.
It is also important to distinguish a project’s exposure to sanctions-related commercial difficulties from the narrower question of whether a particular transaction was legally prohibited.
An expansion project might become harder to finance or equip without every element of the project being expressly banned.
The relevant restrictions must be assessed according to their precise terms.
The evidence examined here does not establish a Shell sanctions violation. EUR-Lex
10. The later court record confirms the importance of those distinctionsA subsequent judgment provides authoritative legal context.
On 28 March 2017, the Court of Justice of the European Union delivered its judgment in:
PJSC Rosneft Oil Company v HM Treasury and Others, Case C-72/15.
The proceedings arose from a reference by the High Court of Justice in England and Wales.
The case concerned the validity and interpretation of EU restrictive measures introduced in response to Russia’s actions destabilising Ukraine.
The Court considered the legal basis and scope of the measures, including restrictions affecting capital markets and particular oil-sector activities.
Its judgment upheld the contested measures against the relevant validity challenges.
The proceedings illustrate why the precise wording and coverage of the sanctions regime were legally important.
They also demonstrate that the restrictions were subject to judicial scrutiny.
But the judgment must not be misrepresented.
Shell was not the defendant in the Rosneft case.
The Court did not investigate the September 2014 Shell–Gazprom meeting.
It did not decide whether Shell’s proposed Sakhalin expansion complied with every applicable sanctions requirement.
And it made no finding that Shell breached the restrictions.
The judgment is relevant as an authoritative explanation of the legal framework within which international energy companies had to operate.
Court of Justice of the European Union: Rosneft v HM Treasury, Case C-72/15
11. The strategic value of an established LNG plantWhy was Sakhalin II so important to Shell?
The commercial evidence provides a straightforward explanation.
Sakhalin II had already passed through the most difficult stages of development.
The offshore fields were producing.
The pipelines and onshore infrastructure were operating.
The LNG plant had been commissioned in 2009.
Export deliveries had been established.
The project had customers in Asian energy markets.
It was generating substantial production volumes.
That distinguished it from prospective projects requiring entirely new infrastructure and uncertain future capital investment.
Shell’s existing minority interest was therefore commercially valuable.
It also represented decades of technical work and investment.
The history of the project had been difficult.
The original production-sharing agreement dated from the 1990s.
The project had encountered substantial environmental controversy, cost escalation and regulatory pressure.
And in 2006–07, Shell had surrendered majority control when Gazprom acquired its controlling interest.
Those events have been documented in earlier Shell Leaks Files.
Yet by 2014, Shell was once again seeking to expand the partnership.
There was a commercial logic to that decision.
Gazprom controlled the project.
Gazprom controlled potentially relevant additional resources.
Shell retained important LNG technology, experience and international market expertise.
Neither company could independently achieve everything it wanted through the existing venture.
Commercial cooperation remained valuable despite political tensions.
That observation does not justify or condemn the relationship.
It explains why it endured.
12. Gazprom’s position was equally complicatedGazprom also faced competing incentives.
The company wanted to strengthen Russia’s position in Asian gas markets.
China had agreed to major long-term pipeline gas purchases earlier in 2014.
Russia was investing in eastern gas infrastructure.
Gazprom was developing fields around Sakhalin and elsewhere in eastern Siberia.
It was also considering competing LNG opportunities.
But Western sanctions increased the difficulty of obtaining certain technologies and financing.
Against that background, an established LNG complex already operating with Shell’s involvement had obvious attractions.
Argus’s October 2014 interpretation that the sanctions difficulties surrounding Vladivostok LNG increased interest in Sakhalin II was therefore commercially plausible.
However, it remains important to distinguish the reporter’s analysis from an authenticated Gazprom investment decision.
The September meeting record does not state that Gazprom formally selected Sakhalin II expansion as a replacement for Vladivostok LNG.
Nor does it establish that the company had resolved the additional gas-supply problem.
Gazprom’s own announcement was narrower.
It confirmed that both companies saw substantial potential to increase LNG production.
The distinction between recognising potential and approving construction is fundamental.
13. The ownership structure still shaped every decisionThe September 2014 corporate announcement repeated Sakhalin Energy’s ownership structure.
Gazprom held 50 per cent plus one share.
Shell held 27.5 per cent minus one share.
Mitsui held 12.5 per cent.
Mitsubishi held 10 per cent.
That arrangement dated from the restructuring completed in 2007.
Before the change, Shell had held a majority interest.
Afterwards, Gazprom became the controlling shareholder.
This remained a defining feature of the company’s Russian business.
Shell could promote expansion.
It could propose technology.
It could bring commercial expertise and experience.
It could participate in engineering studies.
But it could not unilaterally determine the future of Sakhalin Energy.
Nor could it independently allocate Gazprom-controlled Sakhalin III gas reserves to the project.
The proposed third train therefore depended upon decisions extending beyond Shell’s control.
In the absence of a final investment decision, the September meeting should be understood as part of an ongoing negotiation and project-development process.
It was not evidence that every major obstacle had been overcome.
14. What Shell’s annual report tells shareholdersShell’s 2014 Form 20-F contains another relevant passage.
In its risk disclosures, the company explicitly warned investors about trade controls and sanctions.
Shell described the increasing number and scope of such restrictions and explained that breaches could expose companies and employees to significant penalties.
It specifically referred to additional EU and US restrictions directed at defined oil and gas activities in Russia during 2014.
The document therefore shows that Shell was not presenting sanctions as an irrelevant political issue.
The company recognised them as a material category of operational and legal risk.
There is an important difference, however, between acknowledging sanctions risk and abandoning investments.
Shell’s disclosures indicate that management was responding selectively according to the activities involved.
Shale exploration was paused where the restrictions affected it.
Sakhalin II continued operating.
Proposed LNG expansion remained the subject of discussion.
Taken together, the records describe a company attempting to preserve its Russian commercial interests within an increasingly restrictive legal environment.
That is a more accurate conclusion than suggesting that Shell ignored sanctions altogether. SEC
15. The significance of the 30 September meetingThe meeting was important for three reasons.
First, it demonstrated commercial continuity.
Shell and Gazprom remained actively engaged at the highest executive level despite the escalation of Western sanctions.
Second, it confirmed that Sakhalin II expansion remained a subject of mutual interest.
The proposed increase in LNG production had not disappeared from the agenda.
Third, it occurred during a period in which Shell’s wider Russian portfolio was already being affected by sanctions.
The company’s later SEC filing confirms that some exploration activities were paused during 2014.
This places the September meeting in a more precise historical context.
It was neither an ordinary commercial meeting conducted in politically uncomplicated circumstances nor evidence that Shell had defied the law.
It was a meeting between two longstanding commercial partners attempting to preserve opportunities while the legal and political environment around them was changing.
The outcome remained uncertain.
The additional gas resources had not yet been definitively secured for the proposed third train.
The necessary investment decisions had not all been taken.
And the future scope of Western sanctions remained difficult to predict.
Documentary Findings Established by authenticated corporate records30 September 2014: Gazprom chairman Alexey Miller and Shell chief executive Ben van Beurden met at Gazprom’s headquarters.
Gazprom’s official announcement confirms that they discussed current and future cooperation, particularly LNG production at Sakhalin II.
Gazprom publicly identified potential to increase LNG production.
The announcement recalled the February 2014 memorandum-roadmap concerning preparation of engineering documentation for a proposed third train.
Sakhalin Energy remained majority-controlled by Gazprom, with Shell retaining approximately 27.5 per cent.
Royal Dutch Shell’s 2014 Form 20-F confirms that Sakhalin II continued operating and produced more than 10 million tonnes of LNG during the year.
Most significantly, the same filing confirms that Shell paused certain Russian liquids-rich shale-exploration activities in 2014 because of EU and US sanctions. Gazprom
Established by contemporaneous reportingReuters reported in September 2013 that Shell wanted Gazprom to accelerate Sakhalin II expansion and that additional gas supplies were a central obstacle.
Argus reported on 1 October 2014 that sanctions-related difficulties affecting another proposed Gazprom LNG development were increasing the attraction of Sakhalin II expansion.
Argus also identified South Kirinsky as potentially important to the proposed additional train.
LNG Industry independently confirmed the 30 September meeting and the emphasis on increasing LNG production.
These reports provide valuable commercial context but do not establish undisclosed internal decisions by Gazprom or Shell. Royal Dutch Shell Plc .com
Established by government and judicial recordsUS and EU restrictions introduced during 2014 affected specified categories of financing, technology and energy development.
They did not automatically prohibit every existing Russian LNG operation.
The Court of Justice of the European Union subsequently examined the validity and interpretation of relevant restrictive measures in the Rosneft proceedings.
That judgment provides legal context but contains no finding of wrongdoing by Shell. EUR-Lex
Not establishedThe documents do not establish that Shell violated US or EU sanctions.
They do not establish that Shell provided prohibited technology to Gazprom.
They do not establish that the September meeting resulted in a final investment decision.
They do not establish that construction of the third LNG train was authorised in September 2014.
They do not establish that the additional Sakhalin III gas required for expansion had been secured.
They do not establish that Gazprom abandoned Vladivostok LNG solely because of sanctions.
They do not establish that Shell endorsed Russia’s annexation of Crimea.
And they do not establish that Shell’s continued participation in Sakhalin II was itself prohibited by the sanctions framework in force at the time.
Commentary: The Difference Between Staying and ExpandingThe most revealing feature of the September 2014 record is the contrast between what Shell was prepared to stop and what it was still prepared to pursue.
Shell’s annual report confirms that sanctions caused the company to pause certain Russian shale-exploration activities.
Yet Gazprom’s official announcement records that Shell’s chief executive was still discussing the prospect of expanding Sakhalin II.
That contrast reveals a strategy shaped by commercial value and legal distinction.
Sakhalin II was already operating.
It had substantial infrastructure.
It had established export customers.
It was producing large volumes of LNG.
Shell retained a valuable minority interest.
The company had strong reasons to preserve those assets.
New shale exploration presented different legal and commercial circumstances.
Some of those activities fell within restrictions introduced in response to Russia’s actions in Ukraine.
Shell’s filing confirms that the restrictions had consequences.
But the Sakhalin II relationship survived.
The arrangement illustrates an important feature of economic sanctions.
Their effect is not necessarily uniform.
Targeted restrictions can make one activity legally impossible while leaving another permissible.
They can increase the commercial attractiveness of existing infrastructure even while restricting investment in new projects.
They can constrain technology transfer without immediately stopping production from an established facility.
They can also create uncertainty that delays investment decisions even where the underlying activity is not expressly prohibited.
All those distinctions were relevant to Shell’s Russian interests in 2014.
There is, however, another historical dimension.
Shell had already experienced the consequences of dependence upon Russian political and regulatory decisions.
The 2006 confrontation over Sakhalin II had culminated in the company relinquishing majority control.
By 2014, Gazprom held that control.
Shell therefore entered the sanctions crisis not as the dominant shareholder of an independently controlled project but as a minority participant in a venture controlled by Russia’s state gas company.
That relationship limited Shell’s freedom of action.
It also provided access to an established LNG operation that the company clearly regarded as valuable.
The irony is difficult to overlook.
In 2006, Shell found itself under intense pressure over the future of Sakhalin II.
In 2014, with Russia again at the centre of an international confrontation, Shell was pressing to make the same project larger.
The documentary record does not establish that this strategy was unlawful.
Nor does it establish that it was commercially irrational.
It establishes something more historically revealing.
Shell was prepared to continue investing management attention and project-development effort in cooperation with Gazprom even as sanctions were forcing it to suspend other Russian activities.
Its relationship with the Russian state energy sector had survived the confrontation of 2006–07.
It was now surviving the first year of the Ukraine sanctions crisis.
But a more difficult question remained.
A third LNG train could not operate on diplomatic goodwill and engineering experience alone.
It needed gas.
And the prospective gas supplies lay increasingly close to the activities and technologies that Western sanctions were targeting.
That problem was not resolved by the September meeting.
It was waiting immediately ahead.
Principal Documentary Sources1. Gazprom — 30 September 2014
Official announcement confirming the meeting between Alexey Miller and Ben van Beurden and the potential for increasing LNG production at Sakhalin II.
Gazprom and Shell approve Sakhalin II potential capacity creep
2. Royal Dutch Shell plc — Annual Report and Form 20-F 2014
Filed with the US Securities and Exchange Commission on 12 March 2015.
The central Shell-authored source for this instalment. Relevant passages include the Russia section of the Upstream review, the table of operating LNG facilities and the risk-factor disclosures concerning sanctions.
Royal Dutch Shell plc: 2014 Form 20-F, SEC filing
3. Gazprom — 23 February 2014
Official memorandum-roadmap concerning preparation of engineering documentation for Sakhalin II’s proposed third LNG train.
Gazprom and Shell sign roadmap for third Sakhalin II LNG train
4. Reuters — 30 September 2013
Contemporaneous reporting of Shell’s concerns that delays in expanding Sakhalin II could result in missed market opportunities.
Preserved in the Donovan archive.
Shell warns Gazprom of price risks as LNG expansion delayed
5. Argus Media — 1 October 2014
Industry reporting examining the September meeting, sanctions-related pressure on Gazprom’s LNG ambitions and the potential role of South Kirinsky gas.
Gazprom backs Sakhalin 2 LNG expansion
6. LNG Industry — 1 October 2014
Independent contemporaneous report confirming the September meeting and the companies’ stated interest in increasing LNG production.
Gazprom and Shell discuss LNG production at Sakhalin
7. Gazprom — 23 October 2013
Official announcement detailing the Kirinskoye subsea development and the wider Sakhalin III resource base.
Russia’s first subsea production facility tested at Kirinskoye
8. US Department of the Treasury — 12 September 2014
Official announcement introducing expanded restrictions affecting specified Russian energy activities.
US Treasury: Expanded Russia sanctions, September 2014
9. European Union — Regulation 833/2014
The legal framework for EU sectoral restrictions concerning Russia’s actions destabilising Ukraine, including subsequent amendments.
10. Court of Justice of the European Union — 28 March 2017
PJSC Rosneft Oil Company v HM Treasury and Others, Case C-72/15.
Official judicial record concerning the validity and interpretation of EU sanctions measures adopted in 2014.
CJEU judgment: Rosneft v HM Treasury
Archive disclaimer: This instalment distinguishes authenticated corporate records, government restrictions, subsequent judicial findings, contemporaneous journalism and editorial interpretation. Shell’s 2014 Annual Report and Form 20-F is treated as the company’s authenticated account of its operations, not as independent verification of every management judgment. Gazprom’s announcements establish the company’s published position rather than the complete content of confidential negotiations.
No sanctions violation by Shell is alleged or established in the material examined here.
Site-wide disclaimer also applies.
NEXT: The Gas Behind the Third Train — South Kirinsky, Shell’s 2015 Agreement and the Field Washington TargetedThe September 2014 meeting left one essential question unresolved.
Where would the additional gas come from?
Gazprom controlled substantial resources within Sakhalin III.
Shell wanted to expand LNG production at the existing Sakhalin II complex.
But bringing those resources into production required further investment, specialised technology and regulatory approval.
The following year would produce two important developments.
On 18 June 2015, Gazprom and Shell signed agreements that advanced their strategic relationship and the proposed third Sakhalin II LNG train.
Then, on 7 August 2015, the US Department of Commerce took an extraordinary step.
It placed the Yuzhno-Kirinskoye oil and gas field itself on the Entity List, requiring licences for exports, re-exports and transfers of items subject to US Export Administration Regulations to that field.
The US government cited concerns about the field’s substantial oil reserves and the risk of supporting restricted deepwater energy development. Justia
This was no longer merely a general restriction affecting Russian energy companies.
It was a measure directed at a specific offshore field whose gas resources had been discussed in connection with the proposed LNG expansion.
The next Shell Leaks File will examine the June 2015 agreements, the role of South Kirinsky and the August 2015 US restrictions — tracing how the gas resource behind Shell and Gazprom’s expansion ambitions became the subject of a remarkable sanctions decision.
THE SHELL LEAKS FILES: 10 OCTOBER 2026 was first posted on October 10, 2026 at 8:09 pm.©2018 "Royal Dutch Shell Plc .com". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at john@shellnews.net
Shell Faces Historic $108 Million Climate Lawsuit in Brazil Over Floods That Killed Nearly 200 People
10 October 2026
Brazilian federal prosecutors have launched an unprecedented lawsuit against Shell’s Brazilian subsidiary, seeking approximately $108 million in compensation for the catastrophic 2024 floods in Rio Grande do Sul. The case could become an important test of whether an oil multinational can be required to compensate victims of a climate-related disaster according to its alleged contribution to historical global greenhouse gas emissions.
Shell has become the target of a potentially landmark climate lawsuit in Brazil.
On Friday, 9 October 2026, Brazil’s Federal Public Prosecutor’s Office (Ministério Público Federal, or MPF), working alongside the environmental organisation Instituto Preservar, brought civil proceedings against Shell’s Brazilian subsidiary over the devastating floods that struck southern Brazil in April and May 2024.
The prosecutors are seeking more than 541 million Brazilian reais, approximately US$108 million, in compensation.
The legal argument is potentially far more significant than the monetary demand.
The prosecutors contend that Shell should bear a proportionate share of the damage caused by the floods because of the company’s historical and continuing contribution to global greenhouse gas emissions.
According to the case described by Agence France-Presse (AFP), the claim attributes approximately 2% of historical global greenhouse gas emissions to Shell’s contribution to global warming.
That figure is part of the claimants’ case. It has not been established as a finding by the Brazilian court.
Nevertheless, the proceedings represent a striking development in the international effort to hold major fossil-fuel companies financially accountable for climate-related damage.
A catastrophe that devastated southern BrazilThe floods that overwhelmed Rio Grande do Sul in 2024 were among the worst natural disasters in modern Brazilian history.
Extraordinary rainfall inundated communities, destroyed homes, damaged infrastructure and forced hundreds of thousands of people from their homes.
Nearly 200 people died.
Approximately half a million people were displaced.
The destruction extended across residential neighbourhoods, agricultural communities, businesses, transport networks and public facilities.
Porto Alegre, the state capital, became one of the most recognisable images of the disaster as floodwaters submerged streets and buildings.
The scale of the devastation is important to understanding the litigation.
This is not a conventional environmental case involving an oil spill, contaminated site or industrial accident directly attributable to a particular Shell installation.
Instead, prosecutors are attempting to establish responsibility for a disaster associated with the wider consequences of global climate change.
The claim therefore reaches beyond Shell’s immediate operations in Brazil.
It concerns the historical emissions associated with the multinational oil and gas business.
Why prosecutors are targeting ShellAccording to the court documents examined by AFP, Brazilian prosecutors argue that Shell’s historical and continuing greenhouse gas emissions, associated with fossil-fuel exploration, production and sales, have contributed to the warming of the planet.
Their case seeks to translate that alleged contribution into a financial responsibility for the consequences of an extreme weather disaster.
The argument is that major fossil-fuel producers should not be insulated from climate-damage claims merely because the resulting harm occurs far from their production facilities.
The proceedings reportedly seek compensation for both collective material damage and collective moral damage.
French-language AFP reporting describes two components of approximately 270 million reais each, together accounting for the reported total of roughly 541 million reais.
The distinction is important.
The prosecutors are not seeking a conventional regulatory fine.
They are pursuing civil compensation for alleged damage resulting from climate change.
The underlying proposition is that the costs of climate-related disasters should not necessarily be borne entirely by governments, taxpayers, insurers and victims.
Instead, the claimants argue that companies whose emissions have contributed to global warming should share those costs.
An unprecedented intervention by public prosecutorsOne of the most important features of the case is the identity of the claimant.
Climate litigation against multinational energy companies is no longer unusual.
Environmental organisations, affected communities and individual claimants have brought proceedings in several countries.
But this Brazilian action is different.
It has been initiated by a national public prosecution authority.
Maria Antonia Tigre, director of global climate litigation at Columbia University’s Sabin Center for Climate Change Law, told AFP that this was the first case in which a national prosecutor had sued a major oil company over a climate disaster.
That assessment gives the proceedings international significance.
It suggests that climate-damage litigation may be expanding from private civil claims into cases brought directly by public authorities exercising environmental enforcement and public-interest responsibilities.
If other prosecutors adopt comparable approaches, major fossil-fuel producers could face a wider range of climate-related civil claims.
Whether the Brazilian action succeeds remains uncertain.
But its initiation is itself a development worth recording.
The central legal question: can climate damage be apportioned?The Brazilian case raises a difficult question.
Climate change results from greenhouse gas emissions accumulated over long periods and originating from numerous countries, industries, businesses and individuals.
How, then, can a court assign legal responsibility for a particular flood to one company?
The Brazilian prosecutors’ proposed answer is proportional responsibility.
Rather than arguing that Shell alone caused the disaster, they seek to attribute a share of responsibility based on the company’s alleged contribution to historical emissions.
The reported figure is 2%.
The legal theory is significant because it attempts to bridge the gap between scientific attribution and legal liability.
Climate science can assess how human-induced warming influences the probability or severity of certain extreme weather events.
Historical emissions research can also estimate contributions associated with major fossil-fuel producers.
But establishing that climate change contributed to an event is not necessarily the same as proving that a particular defendant is legally liable for a specified proportion of the resulting losses.
A court must consider the applicable legal standards, evidence of causation, the defendant’s conduct, the quantification of damages and any available defences.
These are substantial legal obstacles.
The Brazilian claimants will need to persuade the court that their proposed approach satisfies Brazilian law.
The German precedent: a warning, but not a victory for claimantsThe Brazilian proceedings arrive against a background of important developments in European climate litigation.
One of the most closely watched cases involved Peruvian farmer Saúl Luciano Lliuya and German energy company RWE.
Lliuya sought to establish that RWE should contribute towards measures addressing flood risks affecting his community in Peru.
In 2025, a German court rejected his individual compensation claim.
However, the judgment was widely regarded as significant because it recognised, in principle, the possibility of civil liability for climate-related damage attributable to major emitters.
The distinction is essential.
The German court did not order RWE to pay compensation.
Nor did it establish that every major emitter is automatically liable for a fixed percentage of climate damage.
Nevertheless, the litigation demonstrated that courts may be prepared to examine proportional climate liability as a legally arguable proposition.
Brazilian prosecutors are now pursuing a related approach, although under a different legal system and in materially different circumstances.
Shell already faces climate-damage litigation in BritainThe Brazilian lawsuit is not the only climate-damage claim confronting Shell.
AFP also draws attention to proceedings in the United Kingdom brought by people affected by Typhoon Odette, known internationally as Typhoon Rai, which devastated parts of the Philippines in December 2021.
Those claimants are pursuing Shell in connection with alleged contributions to climate change and the damage they suffered.
The existence of these proceedings illustrates how climate litigation is developing beyond cases seeking reductions in future emissions.
An increasingly important strand seeks financial redress for damage allegedly associated with emissions produced or enabled by major fossil-fuel companies.
Other claims have been brought against energy and industrial companies in connection with flooding in Pakistan and rising sea levels affecting an Indonesian island community.
The cases involve different defendants, legal systems and factual circumstances.
Their outcomes cannot be assumed to be interchangeable.
But together they demonstrate a developing international strategy: using civil liability to pursue compensation for climate-related losses.
What has Shell said?At the time of AFP’s initial reporting, Shell’s Brazilian subsidiary had not provided an immediate response to the news agency’s request for comment.
That should not be interpreted as an admission.
The lawsuit contains allegations that Shell is entitled to contest.
The company may dispute the proposed emissions attribution, the alleged causal connection with the floods, the legal basis for proportional liability, the amount of compensation sought or the appropriate defendant.
The publicly reported information does not yet establish the full scope of Shell’s defence.
Nor does the filing of the lawsuit mean that a Brazilian court has accepted the prosecutors’ allegations.
The case is at an early stage.
A reliable assessment of its prospects will require examination of the originating court documents, the applicable legal provisions and Shell’s response.
Why this case matters to Shell shareholdersThe immediate financial demand of approximately $108 million is not, by itself, a sum likely to threaten Shell’s financial viability.
The broader implications could be considerably more significant.
If courts begin accepting the principle that major fossil-fuel producers can be required to contribute proportionately to climate-disaster compensation, the resulting financial exposure could extend far beyond any individual case.
Extreme weather events can cause enormous losses.
Potential claims may involve destroyed infrastructure, damaged property, agricultural losses, business interruption, displacement and wider social harm.
For shareholders, the important issue is therefore not simply the amount demanded in Brazil.
It is whether the case advances a legal theory capable of being applied in other jurisdictions.
A single unsuccessful lawsuit may have limited financial consequences.
A successful precedent, however, could encourage further litigation and affect the assessment of long-term legal and financial risks associated with fossil-fuel production.
At present, such consequences remain possibilities rather than established liabilities.
The wider contradiction in Shell’s positionThere is also a striking contrast between this development and Shell’s recent financial disclosures.
On 7 October, Shell reported that its indicative refining margin had risen sharply to $42 per barrel.
That disclosure was examined in our recent article:
Three days later, Shell finds itself at the centre of another important climate-related legal development.
The contrast is revealing.
The company’s established oil and gas activities continue to generate substantial commercial opportunities.
At the same time, the long-term environmental consequences associated with fossil-fuel emissions are becoming the subject of increasingly ambitious legal claims.
That tension is likely to remain an important consideration for investors assessing Shell’s future.
A new chapter for the independent Shell archiveThe Brazilian proceedings deserve a permanent place in the independent historical record of Shell-related litigation.
The case is distinctive in several respects.
It involves federal prosecutors rather than only private claimants.
It seeks compensation for a specific, catastrophic weather event.
It advances a theory of proportional responsibility based on historical greenhouse gas emissions.
And it targets Shell’s Brazilian subsidiary while drawing on allegations concerning the wider group’s contribution to global warming.
For the purposes of The Shell Leaks Files and the broader Shell litigation archive, the case should be recorded as a newly filed civil climate-damages action.
The reported compensation demand is approximately 541 million reais, equivalent to around $108 million.
The alleged emissions contribution is 2%.
Neither the claimed damages nor the asserted attribution has yet been judicially established.
The exact court, case number and procedural timetable should be added once independently verified.
These distinctions are important because the value of a historical archive depends on separating allegations, documentary evidence and judicial findings.
Conclusion: a potentially historic test of climate responsibilityBrazil’s lawsuit against Shell could become an important test of how the law responds to the financial consequences of climate change.
The prosecutors are advancing a proposition that would have seemed highly ambitious only a few years ago.
They argue that a major fossil-fuel producer should contribute financially to the damage caused by a catastrophic flood because of its historical contribution to global warming.
Shell has not been found liable.
The prosecutors have not yet proved their case.
And substantial questions remain about causation, attribution and the application of Brazilian environmental law.
Nevertheless, the significance of the proceedings should not be underestimated.
For decades, major oil companies have generated revenues from the extraction, production and sale of fossil fuels.
The emerging legal question is whether those companies can also be required to contribute to the costs of climate-related disasters.
Brazilian federal prosecutors have now placed that question directly before a court in proceedings against Shell.
The outcome may matter far beyond Brazil.
Sources- Agence France-Presse, 10 October 2026 — Brazil prosecutors sue Shell for $108 million over deadly 2024 floods
- UOL / AFP, 9 October 2026 — Brazilian prosecutors seek more than R$541 million from Shell
- Correio do Povo — Federal prosecutors bring Shell flood claim
- Columbia University — Sabin Center for Climate Change Law
- Shell plc — Third Quarter 2026 Update Note
Editorial note: This article reports allegations in newly filed civil proceedings. Shell’s liability has not been established. The precise court docket, pleadings and any subsequent company response remain to be independently verified.
The most important aspect of this story is the involvement of Brazil’s federal prosecutors. That gives the case a significance beyond the $108 million demand and makes it particularly relevant to the Shell litigation archive.
AFP +2
I can also prepare a strong accompanying editorial image showing the 2024 Brazilian floods, Shell and the new climate lawsuit.
Shell Faces Historic $108 Million Climate Lawsuit in Brazil Over Floods That Killed Nearly 200 People was first posted on October 10, 2026 at 9:29 am.©2018 "Royal Dutch Shell Plc .com". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at john@shellnews.net
THE SHELL LEAKS FILES: 9 OCTOBER 2026
Archive reference: SLF-2007-082
Collection: The Sakhalin Papers
Principal authenticated records: Gazprom corporate announcements of 23 February, 23 May and 30 September 2014; Royal Dutch Shell plc Annual Report and Form 20-F 2014; US Treasury sanctions announcements of 16 July and 12 September 2014; EU Council Regulation 833/2014.
Contemporaneous reporting: Associated Press, 30 April 2014; Reuters and RIA Novosti, July–September 2014; Interfax, 19 September 2014; UK Foreign and Commonwealth Office report on the St Petersburg International Economic Forum, published 1 June 2014.
Judicial context: District Court of The Hague, MH17 judgments, 17 November 2022, used solely to establish the historical and legal context of the July 2014 disaster.
Evidence standard: Official corporate records establish meetings, ownership interests and publicly announced proposals. Journalistic reports of Shell statements are attributed to their sources. Sanctions are described according to their scope at the relevant date, not according to restrictions introduced subsequently. No allegation is made that Shell breached sanctions or was involved in the destruction of flight MH17.
Introduction: Five weeks after PutinThe previous Shell Leaks File ended on Good Friday, 18 April 2014.
Ben van Beurden, recently appointed chief executive of Royal Dutch Shell, had travelled to Vladimir Putin’s Novo-Ogaryovo residence outside Moscow.
The meeting occurred barely a month after Russia annexed Crimea.
Western governments had condemned the annexation.
The United States and European Union had begun imposing sanctions.
Yet Shell’s chief executive was seeking Kremlin support for expanding the Sakhalin II liquefied natural gas project.
The Kremlin transcript recorded Putin responding favourably.
Van Beurden presented Shell as a long-term Russian investor with ambitions extending beyond its existing operations.
That meeting might reasonably have been interpreted as an exceptional diplomatic encounter arranged before the crisis worsened.
But what happened next demonstrates that it was not an isolated occasion.
On 23 May, van Beurden returned to discussions with Gazprom’s chairman.
The two companies were still exploring expansion.
And this time the meeting occurred within an international economic forum that had itself become a symbol of Russia’s growing political isolation.
1. The 23 May meeting is documented by GazpromThe primary record is a Gazprom announcement published at 12:35 on 23 May 2014.
Its title was:
“Gazprom and Shell look at possible expansion of cooperation within Sakhalin II.”
The announcement confirms that Alexey Miller and Ben van Beurden held a working meeting during the St Petersburg International Economic Forum.
According to Gazprom, the discussions covered strategic cooperation, including geological exploration, production, hydrocarbon processing, international marketing and LNG.
Particular attention was given to possible expansion of cooperation connected with Sakhalin II.
This was not merely a journalist reporting an unconfirmed conversation.
It was a contemporaneous corporate announcement identifying both executives, the occasion and the subjects discussed. Gazprom
The distinction matters.
We cannot reconstruct every private exchange between the two executives.
But the public record establishes that Shell’s interest in expanding its Russian activities continued after the April Kremlin meeting.
2. What Gazprom and Shell were actually discussingThe commercial centrepiece remained Sakhalin II.
By 2014, Sakhalin Energy had been exporting LNG for approximately five years.
Its liquefaction plant at Prigorodnoye had two production trains with an original combined design capacity of 9.6 million tonnes annually.
Gazprom’s 23 May announcement recorded that the project had produced 10.8 million tonnes of LNG and 5.4 million tonnes of oil in 2013.
The ownership structure was equally important.
Gazprom held 50 per cent plus one share.
Shell held 27.5 per cent minus one share.
Mitsui held 12.5 per cent.
Mitsubishi held 10 per cent.
Those proportions reflected the restructuring completed in 2007, when Shell surrendered majority control following the extraordinary regulatory and commercial confrontation documented earlier in this series. Gazprom
Shell therefore remained a substantial investor.
But it could no longer determine Sakhalin Energy’s future independently.
A third LNG train would require cooperation with Gazprom and agreement among the project participants.
Additional gas resources would also be needed to support any significant expansion.
Gazprom controlled potentially relevant resources elsewhere around Sakhalin.
That gave the Russian company considerable commercial leverage.
Shell brought international LNG expertise, technology, marketing experience and investment capabilities.
The relationship remained mutually useful.
It was also politically sensitive.
3. The February roadmap was not a construction decisionThe May discussion followed an agreement signed in Sochi on 23 February 2014.
At that meeting, Miller and van Beurden signed a memorandum-roadmap providing for preparation of front-end engineering and design documentation for a third Sakhalin II LNG train.
Van Beurden welcomed Gazprom’s approach to expanding the plant and emphasised Sakhalin II’s importance as an LNG supplier to Asia.
Gazprom highlighted growing Asian demand.
These statements reveal the commercial logic behind Shell’s continued engagement.
The Asia-Pacific LNG market appeared to offer substantial opportunities.
Sakhalin II already possessed operating infrastructure, export facilities and established customers.
Expansion could potentially build upon those advantages. Gazprom
But the documentary distinction is essential.
A memorandum authorising engineering preparation is not a final investment decision.
It does not prove that all financing, gas-supply arrangements, construction contracts or government approvals were in place.
Nor does it establish that the third train was certain to be built.
The documents demonstrate corporate intention and preparatory activity.
They do not demonstrate an irrevocable construction commitment.
4. Shell’s finance chief had already sounded a warningThere is another contemporary record that complicates the picture.
On 30 April 2014, less than two weeks after van Beurden’s meeting with Putin, Shell chief financial officer Simon Henryaddressed Russia during a discussion of the company’s financial results.
Associated Press reported that Shell would continue managing existing Russian operations but was reluctant to begin new investments while the political situation remained uncertain.
Henry said the company was unlikely to embark upon new Russian investments in the immediate future.
He also defended van Beurden’s meeting with Putin against suggestions that the visit meant Shell was taking sides in the Ukraine crisis. Washington Examiner
Was Shell contradicting itself?
Not necessarily.
There is an important difference between maintaining an established investment, conducting preliminary engineering for an existing project’s expansion and committing substantial capital to a completely new venture.
The April and May statements can be reconciled on that basis.
Nevertheless, they expose the tension within Shell’s Russian strategy.
Its financial management was acknowledging political risk.
Its chief executive was continuing discussions about commercial opportunity.
Shell wanted to preserve options.
It did not yet want to surrender the possibility of expansion.
5. St Petersburg became a political stageThe setting of the May meeting deserves particular attention.
The St Petersburg International Economic Forum took place between 22 and 24 May 2014.
The event had long served as an important gathering of Russian and international business leaders.
But in 2014 it occurred during an international confrontation.
A contemporary report prepared by the British Foreign and Commonwealth Office, published on 1 June 2014, provides valuable independent context.
The report recorded that fewer senior international participants attended than in previous years.
It also described how Putin used the forum to criticise Western sanctions and appeal directly to international business interests.
According to the British diplomatic account, Putin thanked the Western companies that attended for maintaining what he characterised as an independent and responsible position despite political pressure.
He argued that sanctions harmed the businesses and economies of the countries imposing them.
He also emphasised Russia’s continuing desire for cooperation with European companies. GOV.UK
The political usefulness of Western corporate attendance was therefore explicit.
Putin wanted to demonstrate that Russia was not economically isolated.
Western companies that continued participating in Russian investment discussions helped reinforce that message, whether they intended to or not.
Shell’s meeting with Gazprom occurred within this environment.
That does not establish that van Beurden endorsed Putin’s political arguments.
It establishes that Shell continued its commercial discussions at an event whose political significance was recognised by the British government at the time.
6. Russia was turning towards ChinaTwo days before the Shell–Gazprom meeting, another major energy development had occurred.
On 21 May 2014, Gazprom and China National Petroleum Corporation signed a long-term agreement for Russian gas supplies to China.
Gazprom described the contract as a historic agreement.
It provided for annual deliveries of 38 billion cubic metres of gas under a 30-year arrangement.
The agreement formed part of the development of Russia’s eastern gas infrastructure, including what became known as the Power of Siberia pipeline. Gazprom
That agreement was separate from Sakhalin II.
It should not be presented as a Shell contract or as proof that the proposed third Sakhalin train would supply the Chinese pipeline system.
But it demonstrates the wider strategic setting.
Gazprom was strengthening its position in Asian energy markets.
At the same time, Shell was pursuing further LNG cooperation with Gazprom on Sakhalin.
The commercial incentives were substantial.
Russia was seeking new export opportunities.
Shell wanted access to growing Asian gas demand.
Neither company wished to abandon a relationship that had already produced a major operating LNG complex.
7. July 2014: sanctions become much more seriousThe sanctions environment changed significantly during July.
On 16 July 2014, the US Treasury announced restrictions targeting major Russian financial institutions and energy companies.
The measures included restrictions on certain new financing involving:
Gazprombank.
VEB.
Rosneft.
Novatek.
These were sectoral sanctions designed to limit access to US capital markets.
They did not impose a blanket prohibition upon every commercial transaction involving Russian energy companies.
Nor did the July measures amount to a comprehensive ban on Shell’s existing Sakhalin II operations. U.S. Department of the Treasury
A distinction frequently lost in retrospective accounts is particularly important here.
Gazprombank and Gazprom were not interchangeable legal entities.
Restricting financing involving Gazprombank did not automatically prohibit every transaction with Gazprom itself.
Similarly, restrictions upon Rosneft or Novatek did not automatically prohibit Sakhalin LNG exports.
The precise entity, transaction, date and applicable sanctions jurisdiction mattered.
This was not an academic distinction.
For companies such as Shell, the legal boundaries determined which activities could continue and which required modification, suspension or termination.
8. The following day: the MH17 catastropheOn 17 July 2014, Malaysia Airlines flight MH17 was destroyed over eastern Ukraine.
All 298 passengers and crew died.
The aircraft had departed Amsterdam for Kuala Lumpur.
The tragedy profoundly affected the Netherlands, where Shell was historically headquartered and where many of the victims lived.
Subsequent investigations established that the aircraft was brought down by a Buk surface-to-air missile.
On 17 November 2022, the District Court of The Hague convicted three defendants in connection with the destruction of the aircraft and the murder of those aboard. A fourth defendant was acquitted.
The judgments are preserved in the official MH17 court archive. Court MH17
This judicial context must be handled carefully.
The MH17 proceedings did not concern Shell’s commercial operations.
They made no finding that Shell was involved in the attack.
The relevance to this instalment is historical and political.
After MH17, relations between Russia and the Netherlands deteriorated further.
The political cost of continuing business relations with Russian state enterprises became increasingly difficult to ignore.
Shell’s commercial challenge was now considerably more complicated than it had been during van Beurden’s April visit.
9. Shell’s July response: business strategy unchangedThe contemporary Donovan archive preserves a particularly revealing report from this period.
On 26 July 2014, the archive reproduced a RIA Novosti dispatch dated 25 July.
RIA Novosti reported that an unnamed representative of Shell’s press service had said the company intended to continue operating in Russia despite Western sanctions.
The reported position was that Shell was monitoring the sanctions but had not changed its existing Russian business strategy.
The article identified both upstream and downstream operations.
It also referred to Shell’s established relationships with Gazprom and Gazprom Neft.
This contemporary reproduction is an important historical source.
But the evidential distinction should be retained.
It preserves a statement attributed by RIA Novosti to an unnamed Shell representative.
It is not an independently authenticated internal Shell policy memorandum. Royal Dutch Shell Group .com
Fortunately, the same general corporate position was subsequently reported through additional sources.
10. September: Shell’s Russian chairman confirms the strategyOn 19 September 2014, Shell’s senior representative in Russia, Olivier Lazare, spoke at an economic forum in Sochi.
Reuters reported that Shell intended to continue its Russian activities while complying with Western sanctions.
Lazare said the company’s strategy in Russia had not changed, although Shell was assessing the implications of the restrictions.
The Russian news agency Interfax independently reported the same position.
Lazare emphasised Shell’s longstanding presence in Russia and its preference for a long-term approach to investment.
He also said the company was concentrating on current operations. La Tribune
These reports provide corroboration of the general position recorded by RIA Novosti in July.
Shell was not announcing a wholesale withdrawal.
It was attempting to maintain its existing position while operating within the legal boundaries of the sanctions regime.
The distinction between maintaining operations and authorising new investment remained central.
11. The September sanctions targeted particular technologies and projectsThe restrictions became more significant on 12 September 2014.
The US Treasury announced further measures targeting Russian finance, energy and defence-related entities.
Of particular importance to Shell’s broader Russian interests was Directive 4.
It prohibited specified goods, services and technology from being supplied by US persons, or from the United States, in support of certain Russian deepwater, Arctic offshore and shale projects with the potential to produce oil.
The named Russian companies included Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft.
The Treasury explained that the measures were intended to impede Russia’s development of technologically demanding future oil resources.
It also expressly distinguished those restrictions from a prohibition on the current supply and sale of Russian energy. U.S. Department of the Treasury
The European Union introduced corresponding restrictions through its own sanctions framework, including Regulation 833/2014 and subsequent amendments. Eur-Lex
For Shell, the implications depended upon the activity.
Conventional Sakhalin LNG production was not necessarily subject to the same restrictions as a new Arctic offshore oil venture.
An established gas-processing operation could continue under circumstances in which a new unconventional oil project might encounter serious legal obstacles.
The legal position required project-specific examination.
That is why it would be inaccurate to say that the September sanctions automatically prohibited Shell’s entire Russian business.
Equally, it would be inaccurate to claim that the restrictions were irrelevant to Shell’s future ambitions.
They affected important categories of technology and potential cooperation involving Russian energy companies.
12. Gazprom Neft made the distinction especially importantShell’s Russian exposure extended beyond Sakhalin II.
The company also had a longstanding relationship with Gazprom Neft.
Earlier Shell Leaks Files examined Shell’s participation in Salym Petroleum Development and the companies’ interest in unconventional oil development.
In April 2013, Gazprom and Shell had also signed a memorandum addressing possible cooperation in exploration and development on Russia’s Arctic continental shelf and certain deepwater areas elsewhere.
Gazprom’s May 2014 announcement still identified that memorandum as part of the relationship’s background.
That is a significant documentary detail.
It shows that the parties’ broader ambitions included precisely the types of technically challenging activity that Western sanctions would subsequently begin restricting. Gazprom
But the chronology is crucial.
A memorandum signed in 2013 cannot retrospectively constitute a breach of restrictions introduced in September 2014.
Nor does the existence of that memorandum establish that any prohibited activity occurred after the restrictions took effect.
The stronger conclusion is that Shell’s options were narrowing.
The company could continue established activities where lawful.
But some potential new projects had become considerably more difficult.
13. ExxonMobil provides an instructive comparisonThe effect of the September restrictions can be seen in what happened to another Western oil major.
ExxonMobil was working with Rosneft on Arctic offshore exploration.
Following the new sanctions, Reuters reported on 19 September 2014 that ExxonMobil would wind down drilling in the Russian Arctic.
The US authorities had provided a short extension to enable the company to cease operations safely.
This was a practical consequence of the sanctions regime rather than merely a political statement. Voice of America
Shell’s position was different.
Its principal existing Russian investment was the Sakhalin II LNG project, which was already producing and exporting gas.
The company therefore had a substantial continuing commercial interest that was not automatically eliminated by restrictions designed principally to impede certain new oil developments.
This helps explain why Lazare could speak about maintaining Shell’s Russian strategy while other Western oil activities were being suspended.
It does not mean Shell was unaffected.
It means the restrictions affected different projects differently.
14. Shell’s commercial relationship survivedBy the end of September 2014, the sequence was clear.
Van Beurden had visited Putin in April.
He had met Miller in May.
Shell’s finance chief had expressed caution about new Russian investment.
Western sanctions had expanded.
Flight MH17 had been destroyed over Ukraine.
US restrictions had reached major Russian financial institutions and selected energy activities.
The European Union had introduced its own economic measures.
And Shell’s Russian leadership continued publicly defending the company’s long-term business strategy.
The existing Sakhalin II project provided a powerful commercial incentive to maintain cooperation.
Gazprom controlled the venture.
Shell still held a valuable minority interest.
The LNG plant was operating.
Expansion remained under consideration.
Neither company had concluded that the political crisis required their commercial relationship to end.
The contemporaneous reporting supports that conclusion.
It does not establish that Shell was prepared to disregard the law.
Indeed, the September reporting specifically recorded the company’s intention to comply with applicable sanctions.
The important distinction is between continuing lawful commercial engagement and breaching sanctions.
Only the former is established by the documents examined here.
Documentary Findings Established by official corporate records23 February 2014: Gazprom and Shell signed a memorandum-roadmap covering preparation of front-end engineering documentation for a proposed third Sakhalin II LNG train.
18 April 2014: Ben van Beurden met Vladimir Putin and discussed Shell’s Russian investments and expansion ambitions.
23 May 2014: Van Beurden met Alexey Miller at the St Petersburg International Economic Forum.
Gazprom’s official announcement confirms that the parties discussed strategic cooperation and possible expansion connected with Sakhalin II.
Gazprom remained Sakhalin Energy’s controlling shareholder. Shell held approximately 27.5 per cent.
The Sakhalin II LNG plant was an established operating asset, not a speculative project awaiting first production. Gazprom
Established by government recordsThe US Treasury imposed significant Russian financial and energy-sector restrictions in July 2014.
Further measures introduced in September targeted specified deepwater, Arctic offshore and shale-oil activities involving named Russian companies.
The European Union introduced its own sectoral restrictions.
These measures were specific in their application and did not constitute a comprehensive prohibition on every Western commercial transaction involving Russia.
The contemporary British diplomatic record also establishes that the St Petersburg forum was politically sensitive and that Putin publicly welcomed continued Western business engagement. U.S. Department of the Treasury
Established by contemporaneous reportingAssociated Press reported Simon Henry’s caution concerning new Russian investment on 30 April 2014.
RIA Novosti reported in July that Shell intended to maintain its existing Russian business strategy.
Reuters and Interfax reported in September that Olivier Lazare continued to support Shell’s long-term Russian activities while acknowledging the need to comply with sanctions.
These reports independently support the conclusion that Shell was seeking to maintain commercial continuity despite growing political restrictions. Washington Examiner
Established by subsequent judicial proceedingsThe District Court of The Hague established criminal responsibility in the MH17 case against three defendants.
That judgment provides authoritative context for the political crisis following 17 July 2014.
It does not establish wrongdoing by Shell.
The MH17 proceedings and Shell’s Russian commercial activities were legally separate matters. Court MH17
Not establishedThe documents do not establish that Shell violated US or EU sanctions during the period examined.
They do not establish that van Beurden supported Russia’s annexation of Crimea.
They do not establish that discussions about Sakhalin II expansion amounted to a final investment decision.
They do not establish that Putin directed Shell’s commercial decisions.
They do not establish that Shell participated in or had responsibility for the destruction of flight MH17.
They do not establish that every proposed Shell–Gazprom Arctic or unconventional oil project proceeded.
And they do not establish that Shell’s entire Russian business was prohibited by the sanctions introduced in 2014.
Commentary: The Commercial Logic of StayingThe most revealing aspect of this instalment is not simply that Shell continued dealing with Gazprom.
It is the consistency of that decision across a rapidly deteriorating political environment.
Shell’s chief executive had told Putin that the company wanted to expand.
Its finance chief had subsequently warned against rushing into new investments.
The distinction was commercially rational.
Preserving a producing asset is not the same as committing billions to a new one.
Sakhalin II was already generating LNG revenues.
Its infrastructure existed.
Customers were receiving its products.
Shell’s minority interest remained valuable.
Abandoning that investment would have involved considerable commercial consequences.
Nor would unilateral withdrawal necessarily have changed the Russian state’s ownership or control of the project.
These were real considerations for Shell’s management.
But there was another side.
In 2006, Russian regulatory pressure and the negotiations surrounding Gazprom’s entry had demonstrated how political authority could affect the company’s investment.
Shell had surrendered control of Sakhalin Energy.
By 2014, however, it was once again seeking Russian government support to expand the same project.
That reversal deserves emphasis.
The company that had experienced the consequences of Russia’s determination to control strategic energy resources had chosen to deepen its relationship with the Russian state company that benefited from the restructuring.
This was not necessarily irrational.
From Shell’s perspective, Gazprom controlled resources and infrastructure that were essential to future growth.
The relationship offered commercial opportunities that Shell could not reproduce merely by insisting upon more favourable political circumstances.
But the dependence also created strategic vulnerability.
The more Shell invested in a relationship requiring cooperation with Russian state enterprises, the harder it became to separate ordinary commercial decisions from geopolitical developments.
The St Petersburg forum illustrated that dilemma.
Putin publicly thanked Western companies for maintaining their engagement.
Shell had its own reasons for attending and continuing discussions.
Yet the same corporate participation could serve Russian political purposes by demonstrating that important Western businesses remained willing to cooperate.
The documents do not establish Shell’s intentions beyond those it expressed.
They do establish that the political consequences of commercial activity could extend beyond those intentions.
There is also an important lesson concerning sanctions.
Western restrictions in 2014 were not designed as an immediate, comprehensive severance of every business relationship with Russia.
They developed incrementally.
They targeted individuals, institutions, financing arrangements, technology and particular categories of energy development.
Companies were therefore required to operate within an evolving legal framework.
Some activities continued.
Others became restricted.
Still others were suspended.
For Shell, this left room to maintain Sakhalin II while reconsidering more technically demanding or politically sensitive projects.
That distinction helps explain the company’s conduct.
But it also explains why the relationship endured.
Shell did not have to choose in 2014 between complete withdrawal and complete disregard of sanctions.
It could preserve existing investments, continue permitted discussions and postpone major decisions.
That was the strategy reflected in the contemporary record.
Whether it was politically wise is a separate question.
The later history of Russia, Ukraine and Shell’s own investments would make that question increasingly difficult.
For the purposes of this documentary archive, however, the conclusion should remain anchored to what the sources establish.
Shell continued seeking commercial opportunities with Gazprom during 2014.
It did so while publicly committing to sanctions compliance.
The Russian government valued continued cooperation with Western companies.
And the commercial partnership around Sakhalin II survived another major international crisis.
At least for the time being.
Principal Documentary SourcesGazprom — 23 May 2014
The central primary document confirming the meeting between Alexey Miller and Ben van Beurden and identifying the subjects discussed.
Gazprom: Possible expansion of cooperation within Sakhalin II
Gazprom — 23 February 2014
The memorandum-roadmap concerning engineering preparation for the proposed third Sakhalin II LNG production train.
Gazprom: Roadmap for Sakhalin II third train
UK Foreign and Commonwealth Office — 1 June 2014
Contemporaneous assessment of the St Petersburg International Economic Forum, including Putin’s comments on sanctions and the participation of Western companies.
UK Government: St Petersburg International Economic Forum
US Department of the Treasury — 16 July 2014
Official announcement of restrictions affecting Gazprombank, VEB, Rosneft and Novatek.
US Treasury: Sanctions announced on 16 July 2014
US Department of the Treasury — 12 September 2014
Official announcement detailing the expansion of financial and energy restrictions, including Directive 4.
US Treasury: Expanded sanctions of 12 September 2014
European Union — Council Regulation 833/2014
The regulatory framework governing specified trade, finance and technology restrictions connected with Russia’s actions in Ukraine.
Associated Press — 30 April 2014
Contemporary reporting of Simon Henry’s caution concerning new Russian investments and Shell’s stated intention to maintain existing operations.
AP report: Shell cautious about new Russian investments
RIA Novosti — 25 July 2014
Contemporary reporting of Shell’s intention to maintain its existing Russian business strategy, preserved by the Donovan archive.
Shell Leaves Business Strategy for Russia Unchanged Despite Sanctions
Reuters — 19 September 2014
Contemporaneous account of Olivier Lazare’s statements about Shell’s Russian strategy and sanctions compliance.
Reuters: Shell and Total continue Russian operations
Interfax — 19 September 2014
Independent contemporary reporting of Lazare’s remarks.
Interfax: Sanctions have not yet affected Shell’s Russian operations
District Court of The Hague — 17 November 2022
Official MH17 judgments, used exclusively to establish the subsequent judicial findings concerning the July 2014 tragedy.
District Court of The Hague: MH17 judgments
Royal Dutch Shell plc — Annual Report and Form 20-F 2014
Shell’s own corporate reporting for the year, filed with the US Securities and Exchange Commission in March 2015.
Royal Dutch Shell: 2014 Form 20-F
Archive disclaimer: This instalment relies upon contemporary corporate announcements, government records, historical journalism and subsequent judicial material. Gazprom statements establish what the company publicly reported, not the complete content of private negotiations. Statements attributed to Shell representatives are identified according to their published sources.
The judicial material concerning MH17 does not implicate Shell. No breach of sanctions by Shell is alleged or established in the records examined here. The commercial motives and political implications discussed in the commentary are interpretations, not findings of fact.
Site-wide disclaimer also applies.
NEXT: The Partnership Deepens — Shell and Gazprom Meet Again as Sanctions Take HoldThe September sanctions had created a new legal environment.
But the Shell–Gazprom relationship had not ended.
On 30 September 2014, Alexey Miller and Ben van Beurden met again at Gazprom’s headquarters.
Gazprom’s official announcement recorded that the two executives discussed their existing and future cooperation, particularly LNG production at Sakhalin II.
The company emphasised the potential for increasing LNG output from the project.
This meeting took place only eighteen days after the United States introduced its expanded restrictions on Russian energy technology. Gazprom
That timing raises important questions.
Was Shell still pursuing the proposed third LNG train?
How did the new sanctions affect the project’s prospects?
Could Gazprom obtain the additional gas needed for expansion?
And how would the relationship between Shell and Russia’s state-controlled energy companies develop as Western restrictions became more demanding?
The next Shell Leaks File will examine the 30 September 2014 meeting and the continuing effort to expand Sakhalin II — revealing how Shell and Gazprom sought to preserve their LNG ambitions while the political and legal obstacles surrounding their partnership continued to grow.
THE SHELL LEAKS FILES: 9 OCTOBER 2026 was first posted on October 9, 2026 at 7:49 pm.©2018 "Royal Dutch Shell Plc .com". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at john@shellnews.net
Shell Tax Secrecy: Same Playbook, Different Century — And Please Don’t Mention the 23%
SATIRE — based on documented events, published investigations and official regulatory records.
After three Shell tax articles in a single morning, readers might reasonably wonder whether we are in danger of becoming repetitive.
Not at all.
Shell has thoughtfully provided several decades of material.
Today we learned that the Dutch Ministry of Finance cannot discuss Shell’s leaked transfer-pricing arrangements because they remain protected by fiscal confidentiality — despite the relevant documents having been leaked, published, analysed by researchers, debated by tax academics, defended by Shell and placed before Parliament.
Earlier, our deceased guest columnist Sir Henri Deterding expressed admiration for this achievement.
Everything is public.
Everyone can read it.
But the people who know whether the tax authority agreed with it are forbidden from saying so.
Even Deterding could hardly have designed a better system.
And he was very good at systems.
Shell tax avoidance: apparently not a new hobbyReaders encountering the 2026 Shell Files controversy for the first time might assume that offshore structures, Swiss intellectual property, low-tax jurisdictions and inventive intra-group arrangements represent some exciting new innovation.
Our archive rather spoils that theory.
The Royal Dutch Shell Tax Avoidance Index, assembled years ago, preserves reporting stretching back through earlier controversies involving Switzerland, Bermuda, Luxembourg, Australia, Alaska and the United Kingdom.
Among the contemporary reports indexed there were:
The Guardian, 2009: Shell had transferred ownership of its famous trademarks to Switzerland.
Dutch reporting, 2013: Shell and ABN Amro were described by critics as “masters in tax avoidance.”
US reporting, 2013–14: Shell’s handling of the Kulluk Arctic drilling rig became embroiled in allegations that tax considerations influenced its movements.
Australian reporting, 2015: scrutiny of Shell’s tax position included substantial intercompany financing costs paid to offshore Shell entities.
The old index is still available here. Royal Dutch Shell Tax Avoidance Index
The terminology has evolved.
So have the jurisdictions.
But the general subject matter has a reassuring familiarity.
The Shell logo went skiing in SwitzerlandOne particularly useful historical reference comes from The Guardian’s 2009 Tax Gap investigation.
The newspaper reported that legal ownership of Shell’s globally recognised trademarks had been transferred to Shell Brands International AG in Switzerland.
That Swiss entity could then receive royalties from other Shell companies using the trademarks.
Shell told the Guardian that the move was undertaken for “entirely commercial” reasons, enabling more effective and consistent management of its trademarks.
Which is perfectly possible.
Switzerland is, after all, famous for mountains, watches, chocolate and unexpectedly efficient management of multinational intellectual property.
The Guardian also reported that Shell’s corporate restructuring following the 2005 unification had placed the parent company’s tax residence in the Netherlands. The Guardian
Fast-forward seventeen years and the newly leaked Shell Files are once again examining Swiss Shell royalties.
One could almost believe in corporate tradition.
Bahamas: population 400,000, Shell traders 37, profits $6.2 billionThen we reach the Bahamas.
According to SOMO’s 2026 analysis, Shell Western Supply and Trading Limited recorded approximately $6.2 billion in profit between 2018 and 2023 while employing 37 people.
Shell says those employees were skilled commodity traders genuinely responsible for substantial commercial risk.
That may be so.
They must certainly have been busy.
Thirty-seven people generating billions of dollars in profit makes the average British productivity debate look embarrassingly unambitious.
Perhaps the Dutch government should stop worrying about economic growth and simply relocate Rotterdam to Nassau.
Shell rejects allegations that it improperly shifted profits and says its transfer-pricing arrangements comply with OECD guidelines and applicable law.
That defence belongs in any serious account.
Unfortunately for satire, it also gives us the perfect institutional arrangement:
Shell says the tax authorities knew.
The tax authorities cannot say whether Shell is right.
Everybody wins.
Except perhaps Parliament, which would quite like an answer.
Dutch service companies discover socialismThen there is the intriguing question of Shell service companies in the Netherlands.
According to the Shell Files investigation, some historic arrangements involved group services being recharged at cost without a profit mark-up.
Professor Jan van de Streek has publicly criticised aspects of those arrangements and reportedly considers some of them inconsistent with the arm’s-length principle.
Shell strongly disputes allegations of illegality.
The Dutch government has now helpfully explained the general rule without saying anything about Shell specifically.
Routine intra-group services generally attract an arm’s-length profit margin.
Certain qualifying low-value services can use a simplified 5% mark-up.
There can also be circumstances where no mark-up is justified.
And was Shell’s particular treatment correct?
Ah.
Article 67.
Fiscal confidentiality.
Next question.
For an oil company usually regarded as an enthusiastic practitioner of capitalism, the concept of one Shell company performing services for another without making a profit has a certain charming collectivist quality.
From each subsidiary according to its functions.
To each offshore entity according to its transfer-pricing documentation.
Karl Marx would presumably have asked to see the comparables.
Fortunately, Shell has experience with awkward numbersWhenever Shell and complex financial numbers appear in the same story, students of corporate history may experience an involuntary flashback.
The year was 2004.
The subject was not tax.
It was something even more fundamental for an oil company:
oil and gas reserves.
Shell had repeatedly reported quantities of “proved” reserves to investors which did not satisfy the required SEC standards.
The ultimate scale was enormous.
The US Securities and Exchange Commission found that Shell had overstated its reported proved hydrocarbon reserves for 2002 by:
4.47 billion barrels of oil equivalentor approximately:
23%The SEC also found that the corresponding standardised measure of future cash flows was overstated by approximately $6.6 billion.
Shell paid a $120 million civil penalty in the US settlement.
The companies settled without admitting or denying the SEC’s substantive findings. SEC
That was not an activist allegation.
It was an enforcement action by the United States Securities and Exchange Commission.
And there is a particularly uncomfortable passage in the SEC record.
The Commission said the overstatement and delay in correcting it resulted partly from a desire to create and maintain the appearance of a strong reserves replacement ratio, an important performance measure watched by investors. SEC
In other words, Shell once had a problem involving numbers that looked excellent until someone examined how they had been classified.
Purely by coincidence, the present tax controversy involves arguments over where profits should be classified.
History does not repeat itself.
It sometimes does, however, develop an unfortunate sense of humour.
The important differenceThere is a crucial distinction.
The reserves scandal produced regulatory findings.
The current transfer-pricing controversy has not.
No court judgment identified in the present material establishes that Shell’s leaked transfer-pricing arrangements were unlawful.
No Dutch government finding currently establishes that Shell received improper tax treatment.
No European Commission ruling identified here concludes that the arrangements constituted prohibited state aid.
SOMO, Follow the Money and tax academics have raised serious questions.
Shell disputes accusations of wrongdoing.
And the Dutch government will not disclose Shell’s individual tax treatment.
That distinction is not a minor legal footnote.
It is the difference between documented regulatory wrongdoing in 2004 and contested allegations in 2026.
Satire works better when the facts beneath it are accurate.
Shell has heard this tax tune beforeWhat the older archive demonstrates is that the 2026 controversy did not appear from nowhere.
In 2009 the Guardian reported on Shell trademarks being held in Switzerland and royalty payments flowing there.
Shell denied that tax avoidance motivated the move and described the rationale as commercial. The Guardian
Years later, Shell’s Swiss intellectual-property arrangements have again become the subject of transfer-pricing scrutiny.
The old archive also records controversies involving Bermuda, Luxembourg and other offshore arrangements.
Again, the existence of an offshore company does not prove tax evasion.
Nor is tax avoidance necessarily unlawful.
Multinational groups operate across borders and legitimately organise financing, intellectual property and trading through international subsidiaries.
The interesting question is not whether Shell has subsidiaries in exotic locations.
It is whether the allocation of profit between them reflects genuine economic activity and complies with the arm’s-length principle.
That is precisely what the leaked documents have reopened for debate.
A short course in modern corporate transparencyThe 2026 system can therefore be summarised as follows.
Shell publishes tax principles.
Shell says it complies with OECD rules.
Shell says relevant arrangements were discussed transparently with tax authorities.
Internal Shell documents leak.
Researchers analyse them.
Academics question them.
Parliament asks the Dutch government whether the tax authority agreed with Shell.
The government replies that taxpayer confidentiality prevents it from answering.
The government then assures Parliament that it sees no reason for a special investigation.
This is not secrecy in the traditional sense.
Traditional secrecy involves preventing people from learning something.
This is a more sophisticated Dutch model in which everybody knows what they are discussing, but the institution with the answer is legally prohibited from joining the conversation.
Sir Henri Deterding was right.
It really is an art form.
Imagine the reserves scandal under the same rulesFor purposes of satire, imagine applying the current model retrospectively to 2004.
Investor: “Did Shell overstate its reserves?”
Shell: “We comply with all applicable reporting standards.”
Regulator: “We cannot discuss the affairs of an individual oil company.”
Investor: “But Shell just cut the reserves.”
Regulator: “We cannot confirm that the barrels you can no longer see were previously there.”
Investor: “The company announced it.”
Regulator: “Information becoming public does not remove our duty of confidentiality.”
Investor: “How many barrels are missing?”
Regulator: “Approximately—”
lawyer whispers
Regulator: “We cannot comment.”
Fortunately, securities regulation did not work that way.
The SEC investigated.
It published detailed findings.
Investors learned that the 2002 reserve overstatement amounted to approximately 23%.
Accountability became possible because the regulator could actually explain what it had found.
Tax confidentiality presents a different problemTax information is legitimately subject to greater confidentiality.
Nobody should pretend otherwise.
A functioning tax system depends upon businesses and individuals being able to provide sensitive information to revenue authorities.
The State Secretary therefore has a serious legal basis for refusing to disclose taxpayer-specific material.
But that does not eliminate the accountability problem exposed by the Shell Files.
Indeed, it creates it.
The public can inspect leaked material.
Parliament can ask questions.
Shell can provide its explanation.
Researchers can publish competing calculations.
But there is no public access to the most important piece of the puzzle:
what the Dutch tax authority actually concluded.
Perhaps it thoroughly examined the arrangements and found them correct.
Perhaps it challenged them.
Perhaps Shell made adjustments.
Perhaps rulings were reached.
Perhaps additional tax was paid.
Perhaps none of those things happened.
We do not know.
And the government says it cannot tell us.
Shell therefore occupies a remarkably comfortable positionThe company can legitimately say:
“We discussed these matters with the tax authorities.”
Critics can ask:
“And did the tax authorities agree?”
The government responds:
“Confidential.”
Shell need not invoke secrecy itself.
The state does it for them.
This does not make Shell guilty of anything.
It does make independent verification rather difficult.
Which is rather convenient when your corporate history already contains a 2004 reminder that independent verification can occasionally uncover several billion barrels’ worth of unpleasant surprises.
The ghost of Sir Henri returnsOur fictional Deterding therefore wishes to amend yesterday’s statement.
“I initially praised the Dutch Ministry for turning tax secrecy into an art form. Having now reviewed the historical archive, I withdraw the compliment.
“This is no longer art.
“It is heritage.”
He would perhaps also observe that international tax planning has become unnecessarily complicated.
In his era, businesses went abroad because that was where the oil was.
Now apparently the oil can be in Nigeria, Brazil or the North Sea, the traders can be in the Bahamas, the trademarks can be in Switzerland, the parent company can move from The Hague to London, and the tax explanation can reside safely inside a Dutch government filing cabinet marked:
CANNOT COMMENTProgress.
The serious conclusion behind the jokeThere is a serious point beneath all of this.
Shell is one of the world’s largest multinational corporations.
It operates through hundreds of companies, across numerous tax systems, with internal transactions involving oil, gas, LNG, intellectual property, finance, technical services and commodity trading.
Transfer pricing is unavoidable.
The question is whether the rules consistently allocate taxable profit to the places where genuine economic value is created.
The Shell Files argue that the international system can produce outcomes in which very large profits appear in low-tax jurisdictions.
Shell says its arrangements reflect genuine commercial functions and comply with the rules.
Those competing positions deserve scrutiny.
The problem is that the Dutch institution best placed to resolve at least part of the argument is legally prevented from telling the public what it knows.
That may be entirely proper under current law.
But nobody should confuse legally mandated silence with exoneration.
The Dutch government has not cleared Shell of the allegations contained in the leaked transfer-pricing material.
It has declined to discuss Shell’s individual tax affairs.
Those are very different things.
And Shell’s history gives investors one further reason to insist upon precision.
In 2004, Shell’s proved-reserves numbers turned out to be overstated by 4.47 billion barrels — approximately 23%.
That episode taught a rather expensive lesson:
When dealing with a multinational oil company, the location and classification of billions can matter.
Then it was barrels.
Today it is profits.
And this time, the government says the answer is confidential.
Documentary sourcesThe current Shell tax controversy and Dutch government’s fiscal-confidentiality position are covered in today’s related articles:
Dutch Government Refuses to Reveal What It Knows About Shell Tax Leaks — Citing Tax Secrecy
Dutch Ministry of Finance Says Leaked Shell Tax Documents Remain Confidential: Cannot Confirm What Everyone Has Already Read
Shell Founder Hails Dutch Ministry’s Tax Secrecy as “An Art Form”
Read Sir Henri Deterding’s entirely fictional contribution
The site’s historical tax archive demonstrates that scrutiny of Shell’s international tax structures considerably predates the 2026 Shell Files:
Royal Dutch Shell Tax Avoidance Index
The Guardian’s 2009 investigation documented the transfer of Shell trademark ownership to Switzerland and Shell’s explanation that the move was made for commercial reasons. The Guardian
The US Securities and Exchange Commission’s 2004 enforcement record documents the 4.47-billion-barrel, approximately 23% proved-reserves overstatement and the $120 million civil penalty. SEC
Satirical disclaimer: Sir Henri Deterding died in 1939 and has not commented on Dutch tax policy, transfer pricing, the Bahamas, DEMPE functions or anything else since. Any purported remarks from him in this article are obviously fictional. The factual material surrounding the satire is drawn from the sources identified above.
Site-wide disclaimer applies.
Shell Tax Secrecy: Same Playbook, Different Century — And Please Don’t Mention the 23% was first posted on October 9, 2026 at 1:43 pm.©2018 "Royal Dutch Shell Plc .com". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at john@shellnews.net
THE SHELL LEAKS FILES: 5 OCTOBER 2026
Archive reference: SLF-2007-078
Collection: The Sakhalin Papers
Principal authenticated records: Royal Dutch Shell plc Annual Report and Form 20-F 2013; Gazprom corporate chronology and April 2013 corporate record; US Department of the Interior assessment of Shell’s 2012 Arctic operations; National Transportation Safety Board investigation of the Kulluk grounding
Court record: Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281 (9th Cir. 2013)
Contemporaneous reporting: UPI; RIA Novosti reporting; Daily Telegraph reporting preserved in the Donovan archive
Evidence standard: The Alaska pause, Kulluk grounding, US government review, April 2013 Gazprom–Shell memorandum and parallel shale agreement are established documentary facts. The Russian agreement is treated as a framework for potential cooperation, not as evidence that specific Arctic fields were awarded to Shell or that production was authorised. The proximity in time between the Alaska setbacks and the Russian agreement is established; any proposition that the Russian Arctic was a direct replacement for Alaska remains commentary rather than documented Shell policy.
The sequence is remarkable.
On 31 December 2012, Shell’s Arctic drilling unit Kulluk grounded on the coast of Sitkalidak Island, Alaska, after a tow encountered severe weather.
On 27 February 2013, Shell announced that it would pause exploration drilling in Alaska’s Beaufort and Chukchi seas for the 2013 season.
On 14 March, the US Department of the Interior published a high-level review identifying shortcomings in Shell’s planning, management and contractor oversight.
Then, on:
8 April 2013Shell and Gazprom signed a memorandum concerning hydrocarbon exploration and development on:
Russia’s Arctic shelf.The interval between Shell announcing its Alaska pause and signing the Russian Arctic memorandum was just:
40 days.That does not establish that one decision caused the other.
But it establishes something almost as important.
Shell’s troubled Alaskan campaign had not destroyed its strategic appetite for the Arctic.
It had changed the geography.
And in Russia, access would depend upon partnership with Gazprom. U.S. Department of the Interior
1. The Kulluk had ended 2012 on the rocksShell’s 2012 Alaska campaign had already encountered difficulties before the Kulluk grounding.
Its oil-spill containment system had not been certified in time for drilling into hydrocarbon-bearing zones.
A containment dome was damaged during testing.
The Noble Discoverer, Shell’s other drilling vessel, experienced maritime problems.
Then came the most visible event of all.
While being towed south after the drilling season, the Kulluk encountered worsening weather. Towlines failed. The towing vessel Aiviq lost engine power. The Kulluk crew was eventually evacuated.
On the evening of 31 December 2012, the drilling unit grounded near Ocean Bay on Sitkalidak Island. NTSB
The grounding became the defining image of Shell’s first modern Alaskan Arctic drilling season.
2. Shell itself later acknowledged the difficultiesShell’s authenticated Annual Report and Form 20-F 2013 is particularly useful because it gives the company’s own account.
Shell said that the 2012 top-hole drilling operations themselves had been conducted safely and that they had prepared the ground for further drilling.
But it also acknowledged:
“there were challenges.”
Shell specifically identified difficulty consistently meeting US Environmental Protection Agency air-permit requirements and problems associated with moving the Kulluk out of Alaska after the drilling season.
The company then recorded that it had paused exploration drilling in the Beaufort and Chukchi seas during 2013 in order to prepare its equipment and plans for a resumption. Shell
That is Shell’s own SEC-filed account.
3. The US government was less restrainedThe Department of the Interior published its review on 14 March 2013.
The review examined Shell’s preparations, maritime operations and emergency-response arrangements.
It highlighted:
the delayed certification of the Arctic Challenger containment vessel;
difficulty deploying the containment dome;
serious marine-transport problems involving both drilling units;
and the Kulluk grounding.
The Department concluded that Arctic work required unusually rigorous preparation, contractor supervision and management attention.
Its assessment was blunt:
Shell had performed well in some areas —
but not in others.The Department recommended that Shell produce a comprehensive integrated operations plan before returning and undergo a full independent third-party audit of its management systems. U.S. Department of the Interior
This was not an environmental campaign assessment.
It was the United States Department of the Interior.
4. The Department identified contractor management as a weaknessThe official review also went beyond the individual incidents.
It identified shortcomings in Shell’s management of contractors involved in containment systems, emissions and maritime operations.
That distinction matters.
Shell sometimes characterised its 2012 difficulties as maritime or logistical rather than drilling failures.
That was not entirely wrong: the Kulluk grounded while under tow after the drilling season.
But the government review treated the incidents as relevant to the wider management system necessary for Arctic operations.
The question was not simply whether a drill bit had malfunctioned.
The question was whether the entire system required to operate safely in an exceptionally hostile environment was robust enough. U.S. Department of the Interior
5. A court victory for Shell came two days before the government reportThere was another development in March 2013.
On 12 March, the US Court of Appeals for the Ninth Circuit decided:
Shell Offshore, Inc. v. Greenpeace, Inc.
Greenpeace had challenged a preliminary injunction restricting activists from approaching Shell vessels or engaging in unlawful interference with the company’s Arctic fleet.
The Ninth Circuit upheld the injunction.
It accepted that interference with the vessels could create risks to people, property and the environment and concluded that the district court had not abused its discretion. Justia Law
But the judicial finding must be stated accurately.
The court did not decide that Shell’s Arctic drilling programme was environmentally safe.
It did not approve Shell’s drilling plans.
It did not adjudicate the Kulluk grounding.
And it did not reject Greenpeace’s environmental criticism of Arctic oil exploration.
The case concerned an injunction against interference with Shell’s vessels.
That is its proper evidential boundary.
6. Then came 8 AprilLess than a month after the Interior Department report, the Shell-Gazprom relationship moved into the Arctic.
Gazprom’s own corporate chronology records that in April 2013 it signed with Royal Dutch Shell:
a memorandum setting out principles for cooperation in hydrocarbon exploration and development on Russia’s Arctic shelfand on a deep-water offshore area outside Russia. Gazprom
Contemporaneous reporting fixes the date:
8 April 2013.Alexey Miller, chairman of Gazprom’s Management Committee, and Jorma Ollila, chairman of Royal Dutch Shell, signed the memorandum in Amsterdam.
Present were:
Russian President Vladimir Putin
and
Dutch Prime Minister Mark Rutte. UPI
This was not a minor technical meeting.
The political symbolism was unmistakable.
7. The agreement was broader than one Arctic fieldContemporary reporting quoted Miller explaining that the agreement covered Arctic cooperation generally rather than a single identified deposit.
UPI similarly described it as a framework for exploration of the Russian Arctic without naming a particular reserve basin. Hürriyet Daily News
That is an important qualification.
Some contemporary Russian reporting identified prospective fields and discussed possible Shell equity percentages.
But the memorandum itself should not be converted into a completed field award.
The authenticated Gazprom record says that principles of cooperation were agreed.
It does not establish that Shell received title to a specified Arctic licence on 8 April.
8. Russia’s legal structure made Gazprom crucialContemporaneous RIA Novosti reporting, carried internationally at the time, explained another important point.
Russian rules then restricted development of the country’s continental shelf to companies meeting state-ownership and offshore-experience requirements.
Gazprom and Rosneft were the companies that satisfied those conditions.
An international oil company such as Shell could therefore not simply acquire a Russian Arctic licence and proceed independently.
It needed a qualifying Russian state-controlled partner. Hürriyet Daily News
That made the Shell-Gazprom relationship strategically valuable in a way extending far beyond Sakhalin.
Gazprom did not merely possess resources.
It possessed access.
9. Sakhalin II had provided the operating precedentThe April memorandum did not emerge from an entirely new relationship.
Shell and Gazprom had spent years learning to operate together at Sakhalin II.
By 2013, Shell still owned:
27.5 per centof the project.
Shell’s Annual Report says Sakhalin II produced approximately:
320,000 barrels of oil equivalent per dayand more than:
10 million tonnes of LNGduring 2013. Shell
Shell’s equity LNG sales from Sakhalin amounted to approximately:
2.9 million tonnesthat year. Shell
This was the commercial foundation beneath the Arctic diplomacy.
The Shell-Gazprom partnership was not theoretical.
It was already operating one of the world’s largest integrated oil and gas projects.
10. Western Siberia supplied another precedentShell also retained its 50 per cent interest in the Salym oilfields.
Its 2013 annual report records production of approximately:
145,000 boe per dayfrom Salym that year. Shell
Salym was jointly owned with Gazprom Neft.
So by April 2013 Shell’s Russian partnership architecture contained two important models.
At Sakhalin II:
Shell was the minority partner of Gazprom.
At Salym:
Shell and Gazprom Neft were equal partners.
The new Arctic and shale agreements drew directly upon that experience.
11. The same Amsterdam meeting produced a second agreementThe Arctic memorandum was only half the story.
Gazprom Neft chief Alexander Dyukov and Shell Upstream International director Andy Brown also signed a memorandum concerning:
liquids-rich shale development in Western Siberia.The Gazprom Neft corporate account said this confirmed the companies’ partnership arrangements for exploration and development of shale resources.
The proposed structure envisaged equal participation and built upon the companies’ existing Salym relationship. Euro-Petrole
The April agreements therefore pushed Shell and the Gazprom group in two frontier directions simultaneously:
offshore Arctic hydrocarbons;
and unconventional onshore oil.
12. Shell’s chief executive said the partnership had reached “a new level”Peter Voser’s public explanation is important.
The Gazprom Neft account quoted him saying that the agreements brought the partnership:
“to a new level”.Voser specifically invoked the companies’ long experience together at:
Sakhalin II
and
Salym,
and said Shell welcomed the opportunity to apply that experience and its technology to Arctic operations and shale-oil development. Euro-Petrole
The connection to this archive could hardly be clearer.
Sakhalin II was no longer merely an asset whose control Shell had lost.
Shell itself was presenting the partnership developed there as a foundation for future Russian expansion.
13. The timing was noticed immediatelyThe contrast with Alaska was obvious to contemporary journalists.
On 4 April 2013, before the Amsterdam signing, Daily Telegraph reporting preserved in this archive noted that Shell was preparing a fresh Arctic initiative with Gazprom only weeks after delaying its Alaskan campaign following the setbacks of 2012. Royal Dutch Shell Plc .com
That contemporaneous observation matters because it removes hindsight from the comparison.
The juxtaposition was evident at the time.
Shell was pausing in one Arctic jurisdiction.
It was simultaneously preparing to expand into another.
14. But “Shell switched from Alaska to Russia” would go too farThere is no document examined for this instalment in which Shell says:
Because Alaska went badly, we will replace it with Russia.
There is no evidence that the Russian negotiations began only after the Kulluk grounded.
Large international energy agreements normally develop over substantial periods.
And Shell continued to describe Alaska as a prospective long-term opportunity.
It would therefore be misleading to suggest that the April agreement represented an immediate geographical substitution.
What the chronology does establish is narrower and more defensible:
the Alaska problems did not cause Shell to abandon Arctic oil as a strategic objective.Forty days after announcing its Alaska drilling pause, Shell signed a framework to examine Russian Arctic development with Gazprom.
15. Shell’s own annual report confirms that the Arctic remained strategicThe 2013 Form 20-F settles this point.
In its strategy discussion, Shell identified longer-term opportunities including:
tight oil and shale;
heavy oil;
and:
the Arctic.It said large reserve positions might become available in those areas, with development paced by market conditions, local operating circumstances and regulation. Shell
In other words, the Arctic remained within Shell’s long-term portfolio strategy even after the events of 2012.
Alaska had been paused.
The strategic thesis had not.
16. Shell simultaneously warned shareholders how dangerous the Arctic could beThe same authenticated document contains the necessary counterweight.
Shell’s risk section specifically identified operations in difficult geographical and climatic areas, including the Arctic and maritime environments.
It warned that major HSSE events could lead to:
injuries;
loss of life;
environmental damage;
business disruption;
reputational damage;
and potentially:
loss of licence to operate. ShellThis was generic corporate risk disclosure.
It was not a statement about the Gazprom memorandum specifically.
But once again the juxtaposition is striking.
Shell was identifying the Arctic as both:
a long-term resource opportunity;
and
an environment carrying exceptional operational and reputational risk.
17. Access to reserves also depended on governmentsShell’s same risk disclosure contains another sentence that bears directly upon Russia.
The company said future oil and gas production depended partly upon gaining access to new reserves through:
negotiations with governments and other resource owners. ShellThat observation was global.
It was not written specifically about Gazprom.
But the Russian Arctic was an unusually clear example of the principle.
Shell possessed capital and technology.
It did not control the Russian state’s offshore licence system.
Partnership with Gazprom supplied something Shell could not manufacture for itself:
political and legal access to the resource base.
18. The Kulluk story subsequently became even more seriousThe April 2013 Russian agreement preceded the final US investigation of the Kulluk casualty.
The later National Transportation Safety Board finding is therefore included here as a retrospective official record, not as information available to Shell when it signed in Amsterdam.
The NTSB ultimately determined that the probable cause of the grounding was:
Shell’s inadequate assessment of the risks of the planned tow,which resulted in a tow plan insufficient to mitigate those risks. NTSB
That finding is significant because responsibility was not confined to bad weather or an unfortunate contractor mishap.
The federal accident investigator placed the central deficiency in Shell’s risk assessment and tow planning.
19. That does not establish anything about Russian Arctic operationsThe NTSB finding must not be stretched beyond its jurisdiction.
It concerned one tow involving the Kulluk in Alaska.
It did not assess Gazprom.
It did not assess Russian Arctic drilling plans.
It did not determine that Shell was incapable of safely operating elsewhere in the Arctic.
It did not examine the April 2013 memorandum.
The legitimate historical point is therefore comparative, not legal:
Shell was pursuing another Arctic opportunity while the consequences of its first Alaskan campaign were still being investigated.
20. Nor was Shell already drilling with Gazprom in the Russian ArcticAnother distinction is essential.
The April memorandum expressed an intention to cooperate.
It did not mean that Shell immediately began drilling a Russian Arctic well.
Indeed, later in 2013 Shell itself told Dutch media, during controversy over Gazprom and Greenpeace, that it was not then conducting joint Arctic operations with Gazprom.
The framework and the operating project must not be confused. NOS
The April agreement established direction.
Implementation remained ahead.
21. Nevertheless, the direction could hardly have been clearerBy this stage the documentary sequence had become remarkable.
2006Shell agrees to surrender control of Sakhalin II.
2007Gazprom becomes controlling shareholder.
2009Sakhalin LNG begins production.
2010Shell and Gazprom sign a Protocol on Strategic Global Cooperation.
2011Shell and Gazprom Neft investigate a wider joint venture.
2013Shell and Gazprom agree principles for cooperation on the Russian Arctic shelf.
This was not merely the continuation of an inherited investment.
The relationship was expanding geographically and technologically.
22. The partner that took control had become the gateway to the next frontierThis is where documentary fact ends and interpretation begins.
The public record does not establish that Shell trusted Gazprom politically.
It does not establish that Shell had forgotten the events of 2006.
It does not establish that Shell regarded the Russian investment climate as low risk.
Indeed, Shell’s own SEC filings routinely warned about political risk, expropriation and contractual renegotiation.
But Shell’s behaviour demonstrates something important.
Gazprom had become useful to Shell not simply because it controlled Sakhalin Energy.
It controlled access to opportunities that Shell wanted.
The Arctic sharpened that dependency.
A foreign company could possess enormous technical capability and still require a Russian state company to reach the resource.
23. The Alaska experience should have made the Arctic risks impossible to romanticiseBy April 2013 Shell had already learned that Arctic exploration involved much more than geological promise.
It required:
specialised vessels;
spill-response capability;
containment systems;
weather forecasting;
marine logistics;
contractor management;
environmental approvals;
regulatory coordination;
and the ability to recover from failures far from conventional infrastructure.
The Interior Department review had made precisely that point.
The Arctic was not merely a large reserve map coloured white.
It was an integrated risk system. U.S. Department of the Interior
The Russian Arctic would not repeal those physical realities.
It would add a different political and legal environment to them.
24. Yet Shell still saw the prizeThis is perhaps the central conclusion of the file.
The events of 2012 had demonstrated how badly Arctic logistics could go.
The 2013 government review had demonstrated how closely Shell’s management systems would be scrutinised.
Shell’s own annual report acknowledged environmental and operational risks.
And yet Shell still listed the Arctic among its long-term growth opportunities.
Then it signed with Gazprom.
That combination tells us more about the scale Shell attributed to the potential prize than any corporate slogan could.
For Shell, the Arctic remained worth pursuing.
Documentary Findings EstablishedThe Shell-owned Kulluk grounded near Sitkalidak Island, Alaska, on 31 December 2012 while under tow. NTSB
Shell announced on 27 February 2013 that it would pause offshore Alaska exploration drilling for the 2013 season. The US Department of the Interior subsequently recorded that decision in its official review. U.S. Department of the Interior
On 14 March 2013, the Department of the Interior published an assessment identifying difficulties involving Shell’s containment system, marine transport and contractor management and recommended an integrated operating plan and independent audit. U.S. Department of the Interior
On 8 April 2013, Alexey Miller and Jorma Ollila signed a memorandum setting out principles for Gazprom-Shell cooperation in hydrocarbon exploration and development on Russia’s Arctic shelf and a deep-water offshore project outside Russia. Putin and Rutte were present. Gazprom
Shell and Gazprom Neft simultaneously advanced cooperation concerning liquids-rich shale resources in Western Siberia. Euro-Petrole
Shell’s 2013 Annual Report recorded a 27.5 per cent Sakhalin II interest, with the project producing approximately 320,000 boe/d and more than 10 million tonnes of LNG that year. Shell
The same filing recorded Shell’s 50 per cent Salym interest, with production of approximately 145,000 boe/d. Shell
Shell continued to identify the Arctic and unconventional resources among its longer-term strategic opportunities. Shell
Established court recordOn 12 March 2013, the Ninth Circuit affirmed a preliminary injunction restricting Greenpeace interference with Shell’s Arctic vessels.
The litigation concerned vessel interference and safety zones.
It was not a judicial endorsement of the environmental safety of Shell’s Arctic drilling programme. Justia Law
Later official findingThe National Transportation Safety Board subsequently determined that the probable cause of the Kulluk grounding was Shell’s inadequate assessment of tow risk and an insufficient tow plan. NTSB
That later finding concerns the Alaska casualty and should not be treated as a finding about Gazprom or Russian Arctic operations.
Not establishedThe documentary record examined here does not establish that the April 2013 Russian Arctic agreement was a direct replacement for Shell’s Alaskan programme.
It does not establish that Gazprom promised Shell a particular Russian Arctic field in exchange for any earlier Sakhalin concession.
It does not establish that the April memorandum itself transferred an Arctic production licence to Shell.
It does not establish that any field percentages discussed in contemporary press reports became completed Shell ownership interests.
It does not establish that Shell had begun joint Arctic drilling with Gazprom in April 2013.
And it does not establish that the difficulties in Alaska caused Shell’s decision to deepen cooperation with Gazprom.
CommentaryThere is an important difference between retreat and redeployment.
Shell retreated operationally from Alaska in 2013.
It did not retreat strategically from the Arctic.
That distinction is written into the documents.
The Kulluk was grounded on New Year’s Eve.
Shell paused Alaska drilling in February.
The United States government issued its critical review in March.
Then Shell signed the Russian Arctic memorandum in April.
The temptation is to describe that as an extraordinary act of corporate stubbornness.
A more useful interpretation is that Shell still believed the underlying resource opportunity outweighed the difficulties it had encountered.
What changed was the structure through which that opportunity might be pursued.
In Alaska, Shell had acquired leases and was trying to operate its own campaign within the American regulatory system.
In Russia, the starting point was different.
Access passed through a state-controlled partner.
And that partner was Gazprom.
The same company that had acquired control of Sakhalin II during the crisis of 2006 was now potentially opening the door to an even more formidable frontier.
There is a historical symmetry here.
Sakhalin taught Shell that geology alone did not determine access to Russian hydrocarbons.
Political power mattered.
Licensing mattered.
The state company mattered.
By 2013 Shell was no longer trying to work around that reality.
It was building its strategy through it.
And Gazprom, for its part, wanted what Shell could supply:
capital;
technology;
project experience;
and international offshore capability.
That is why the April 2013 agreement belongs in the Sakhalin Papers.
It shows what Sakhalin II eventually became.
Not merely an LNG plant.
Not merely a disputed ownership history.
But the institutional foundation of a much wider Shell relationship with the Russian state energy system.
The irony is difficult to avoid.
Shell had lost control at Sakhalin.
Seven years later it was taking the resulting partnership north —
towards the Arctic.
Source RecordRoyal Dutch Shell plc’s authenticated Annual Report and Form 20-F 2013 records the company’s Alaska pause, the difficulties involving the Kulluk, its continuing Sakhalin II and Salym interests, and its classification of the Arctic as a longer-term strategic opportunity. The report states that it also served as Shell’s Form 20-F filed with the US Securities and Exchange Commission. Shell
Royal Dutch Shell plc — Annual Report and Form 20-F 2013
Gazprom’s official 2013 corporate chronicle records the April memorandum with Royal Dutch Shell covering exploration and development on Russia’s Arctic shelf and a deep-water offshore area abroad. Gazprom
Gazprom — Chronicle of Gazprom for 2013
The contemporaneous Gazprom Neft account records the parallel Arctic and Western Siberian shale agreements and the companies’ statements concerning the use of their Sakhalin II and Salym experience. Euro-Petrole
Gazprom Neft corporate account — Arctic offshore and Western Siberian shale cooperation, April 2013
UPI contemporaneously reported the 8 April 2013 Amsterdam signing, the presence of Vladimir Putin and Mark Rutte and the framework nature of the Arctic agreement. UPI
UPI — Shell signals intent for Russian Arctic, 9 April 2013
The US Department of the Interior’s 14 March 2013 assessment is the principal governmental record concerning the problems encountered during Shell’s 2012 Alaska programme and the reforms demanded before further operations. U.S. Department of the Interior
US Department of the Interior — Assessment of Shell’s 2012 Arctic Operations
The relevant US judicial record is Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281 (9th Cir. 2013), decided on 12 March 2013. Justia Law
US Court of Appeals record — Shell Offshore v. Greenpeace
The National Transportation Safety Board’s completed investigation records the later official probable-cause finding concerning the Kulluk grounding. NTSB
NTSB — Grounding of Mobile Offshore Drilling Unit Kulluk
The Daily Telegraph report of 4 April 2013, preserved in the Donovan archive, provides contemporaneous evidence that the timing of Shell’s renewed Russian Arctic initiative immediately after its Alaska setbacks was already being remarked upon before the agreement was signed. Royal Dutch Shell Plc .com
Donovan archive — Daily Telegraph: Shell to sign Russian Arctic deal, 4 April 2013
Archive disclaimer: A memorandum setting principles for future cooperation is not treated as a completed field development, licence award or final investment decision. Later investigative findings are clearly separated from information available at the time. Judicial findings are confined to the matters actually decided by the courts. Commentary concerning strategic motives is identified as interpretation rather than documentary fact.
Site-wide disclaimer applies.
Next instalment SLF-2007-079 — The Sakhalin Papers LXIX: “A Good and Reliable Partner” — The Arctic 30 Put Shell’s Gazprom Alliance to the TestOnly five months after the Amsterdam agreement, the Shell-Gazprom Arctic relationship collided with an international political controversy.
On 18 September 2013, Greenpeace activists attempted to protest at Gazprom’s Prirazlomnaya Arctic platform.
The following day Russian forces seized the Arctic Sunrise.
Its 28 activists and two freelance journalists — soon known internationally as the Arctic 30 — were detained.
Greenpeace then turned directly on Shell.
It called upon the company to break its Arctic cooperation with Gazprom and argued that Shell’s relationship gave it influence it should use on behalf of the prisoners. Shell rejected responsibility for the arrests. When asked about the relationship in October, a Shell spokesman described Gazprom as a:
“good and reliable partner.” RD.nlShell also stressed that it was not operating the Prirazlomnaya platform and had no joint Arctic operations with Gazprom underway at that moment. NOS
Then, on 20 December 2013, Gazprom announced that Prirazlomnoye had begun producing oil — the first producing hydrocarbon project on Russia’s Arctic shelf. Gazprom
The next file will examine the collision between Shell’s expanding commercial alliance with Gazprom, Greenpeace’s Arctic campaign, and Russian state power — carefully separating what Gazprom did, what the Russian authorities did, what Greenpeace alleged, and what Shell itself was actually responsible for.
THE SHELL LEAKS FILES: 5 OCTOBER 2026 was first posted on October 5, 2026 at 10:42 pm.©2018 "Royal Dutch Shell Plc .com". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at john@shellnews.net
Announcing the 2026 Community Sentinel Award Recipients
Join us in New Orleans or virtually as we celebrate this year's Sentinels on Thursday, November 12, 2026.
The post Announcing the 2026 Community Sentinel Award Recipients appeared first on FracTracker Alliance.
Pages
- « first
- ‹ previous
- 1
- 2
- 3
- 4
The Fine Print I:
Disclaimer: The views expressed on this site are not the official position of the IWW (or even the IWW’s EUC) unless otherwise indicated and do not necessarily represent the views of anyone but the author’s, nor should it be assumed that any of these authors automatically support the IWW or endorse any of its positions.
Further: the inclusion of a link on our site (other than the link to the main IWW site) does not imply endorsement by or an alliance with the IWW. These sites have been chosen by our members due to their perceived relevance to the IWW EUC and are included here for informational purposes only. If you have any suggestions or comments on any of the links included (or not included) above, please contact us.
The Fine Print II:
Fair Use Notice: The material on this site is provided for educational and informational purposes. It may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. It is being made available in an effort to advance the understanding of scientific, environmental, economic, social justice and human rights issues etc.
It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have an interest in using the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. The information on this site does not constitute legal or technical advice.
This site is not the official webpage of the Industrial Workers of the World.