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Ukraine Court Finds Shell ‘Dishonest’ Over Russian Oligarch Deal

A dispute between Shell and Ukraine ends with a nasty surprise for the British oil giant

An appeals court in Ukraine has found Shell “dishonest” over its business dealings in the country. Photo: Maureen McLean / Alamy Stock

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A Ukrainian court has called Shell’s actions over its joint venture with a sanctioned Russian oligarch “dishonest” – and confiscated a slice of its business in Ukraine.

The Appeals Chamber of Ukraine’s Higher Anti-Corruption Court ruled on 2 April that Shell had sought to “reduce the amount of assets held by a sanctioned individual” as it “diluted” the shares held in a joint venture with Russia’s Independent Petroleum Company (IPC).

The proceedings were held after Ukraine’s Ministry of Justice sought to confiscate assets held by IPC’s owner, top Russian oil executive Eduard Khudainatov.

Khudainatov, a former Rosneft CEO, the sole owner of IPC and thought to be the proxy owner of Vladimir Putin‘s $500 million yacht, was sanctioned by the EU and later Ukraine in 2022.  

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Shell told Byline Times the decision was an “unjustified appropriation of Shell’s foreign investments by Ukraine”. The company promised to “take all necessary steps to protect our people, assets, investments and reputation”. 

The case centered around a Dutch court decision made at the height of Russia’s full-scale invasion of Ukraine in 2022. As the West rushed to sanction Russian companies and top officials, Shell moved to exit its Russia projects. 

The oil and gas multinational also sought a solution to its Ukraine gas station business, the Alliance Group, a joint venture of 131 Shell-branded petrol stations in the country with IPC. Shell held 51% of the shares in a Dutch holding company for the venture, Cicerone Holding BV, IPC held 49%. 

On 3 June 2022, the EU sanctioned Khudainatov for “benefiting from the Russian government”. The 61-year-old worked on Putin’s first presidential campaign in 2000, and later worked closely with Putin ally Igor Sechin at Russian state oil company Rosneft before setting up IPC, a leading oil producer in the country.  

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Five days later, on 8 June 2022, Shell asked the Enterprise Chamber of the Amsterdam Court of Appeal to permit the issuance of new shares in Cicerone – against IPC’s protests in the UK courts – so it could invest in the Alliance Group, which at the time, it claimed, was facing an “acute liquidity crisis”. 

The Dutch court permitted additional shares to be issued on 15 December 2022, and Shell gradually gained more shares in Cicerone as the company said it poured money into the gas station business. By summer 2023, it had 97%. Khudainatov’s shares were gradually “diluted” to 2.56%. 

The Ukrainian court said that Khudainatov had been sanctioned by Ukraine in October 2022, and then had his Ukrainian assets seized as part of a criminal case on 13 December 2022, yet Shell neither “accounted” for these actions, nor “informed” the Dutch authorities of them when it sought relief for its Ukraine business.

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Shell’s dilution of Khudainatov’s shares “clearly go against the interests of the Ukrainian state” as it seeks the assets of sanctioned individuals to fight back against Russia’s war, the court found. 

As a result, the court ruled in favour of the Ukrainian Justice Ministry, confiscating 49% of Cicerone’s shares in Alliance Holding in favour of the Ukrainian state. Shell will receive its previous 51%. 

The Appeals Court decision overturned a previous Ukrainian court ruling to not confiscate Shell’s enlarged interest in Alliance in January 2024 because “it would violate the rights of a legal entity not under sanctions” and Ukraine has no mechanism to compensate losses suffered by unsanctioned legal entities. 


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Shell said that it had “injected millions of dollars to keep its loss-making Ukrainian retail business operational […] all with the goal of maintaining critical national infrastructure for the people of Ukraine”. 

In its appeal, Shell said that Khudainatov “had no influence” over Cicerone, and that the additional shares had been issued in accordance with Dutch sanctions authorities and courts.

Neither Khudainatov, nor any legal representatives, appeared in court.

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