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China’s oil giants are preparing to buy Shell’s shares in a terrible project

Sources close to Bloomberg revealed that major Chinese energy companies are in talks with Shell Plc to buy back a stake in a major Chinese gas export project. Russia.

CNOOC, CNPC and Sinopec Group are discussing with Shell a 27.5% stake in the Sakhalin-2 liquefied natural gas joint venture. The move comes after the European oil giant said it would withdraw from operations in Russia after conflicts with Ukraine occurred.

Currently, the discussions are in the early stages and it is still possible that no agreement can be reached between the companies. In addition, Shell is also open to negotiating with other potential buyers outside of China, the source said.

Shares of Shell rose 1.3% on the London floor after the news was published, while the FTSE 100 remained flat.

These negotiations include the sale of shares to one of the Chinese companies, or possibly two and all three.

Shell declined to comment for this story. Representatives from China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC) and China Petrochemical Corporation (CPC) also did not respond to requests for comment. The State-owned Assets Supervision and Administration Commission of China’s State Council, which oversees state-owned enterprises, also did not make any announcements.

Like rivals including ExxonMobil, Shell surprised the energy industry when it announced it was pulling out of multibillion-dollar projects in Russia following the conflict in early February. Earlier this month, Shell says that divesting from its Russian operations could cost it up to $5 billion.

Meanwhile, London-based competitor BP Plc also has contacts with state-backed companies in Asia and the Middle East, including CNPC and Sinopec. BP is looking to sell off its 20% stake in Russia’s Rosneft PJSC.

Dozens of Shell employees temporarily working at the Sakhalin-2 project in Russia over the weekend were forced to return to other offices as the company sought to leave Russia.

The Russia-Ukraine conflict has rattled energy markets and pushed up energy prices, adding further pressure on governments around the globe to rethink their long-term plans with fuel supplies. China’s trade relationship with Moscow has given Chinese companies an edge in acquiring stakes in major projects as Western firms pull back.

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