Shell Exits Ukraine by Selling Stake in Fueling Network to State-Owned Firm

State-owned PJSC Ukrnafta has signed a deal with Shell PLC to acquire the British energy major’s 51 percent stake in a gas station network operator in Ukraine, paving the way for Shell’s exit from the country.

The transaction involves Shell’s stake in Alliance Holding LLC, according to online statements by Ukrnafta and parent company Naftogaz Group. Ukrnafta had won competitive bidding for the stake.

Alliance Holding was 100 percent owned by Cicerone Holding BV, a co-venture between Shell (51 percent) and a firm owned by a Russian oligarch (49 percent), according to reports in Ukraine. After a Ukrainian court granted sanctions against Russian oligarch Eduard Khudainatov in January 2024, Shell became a 51 percent owner in Alliance Holding while the state acquired the remaining 49 percent, the reports said.

A filing by Shell with the United States Securities and Exchange Commission confirms Shell held a 51 percent ownership in Cicerone Holding, registered in the Netherlands, and 51 percent ownership in Alliance Holding, registered in Ukraine.

The 51 percent retail stake is Shell’s remaining investment in Ukraine after the company ended all upstream activities there in 2021, according to information published on the company’s website.

Announcing the acquisition, Ukrnafta said, “In the coming days, Ukrnafta and Shell will file an application with the Antimonopoly Committee for a concentration permit”.

“After the permit is received, Ukrnafta will be able to complete the transaction and acquire all the rights and obligations of the shareholder”, it added.

Shell is among the top 10 gas fueling network owners in Ukraine with an operatorship of 118 stations, Ukrnafta noted. “It ranks ninth in terms of fuel sales in the first 9 months of 2024 and ranks seventh in terms of the number of filling stations located mainly in favorable heavy-traffic areas”, Ukrnafta said.

Ukrnafta expects to rebrand its newly acquired sites within a year. Shell’s divestment does not cancel business-to-business contracts, while all 1,550 employees working at these stations will be retained, Ukrnafta said.

Naftogaz chief executive Oleksiy Chernyshov said about the acquisition, "The Naftogaz Group has not only adapted to the war conditions but becomes stronger”.

“We remain flexible and we are not afraid to make decisions that allow the State earning money”, Chernyshov added.

“The profit that Alliance Holding will generate will go to the national budget in dividends”, Chernyshov said.

Earlier Naftogaz reported it had contributed over UAH 66 billion ($1.6 billion) to Ukraine’s national budget via taxes in the first 10 months of 2024, besides an additional UAH 5 billion ($121.16 million) remitted to local budgets.

“We remain one of the largest taxpayers, enabling the government to finance military and humanitarian needs”, Chernyshov said in a company statement Monday.

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