Shell has agreed to sell its retail and lubricants businesses in Russia to Lukoil, the first big deal in the oil and gas sector since most western companies pledged to leave the country following the invasion of Ukraine. The sale of Shell Neft for an undisclosed sum, which is subject to regulatory approval by Russia’s anti-monopoly service, includes 411 petrol stations and a lubricants blending plant roughly 200km north-west of Moscow. Huibert Vigeveno, head of the UK-listed group’s downstream business, said the wellbeing of employees had been Shell’s primary concern and that the deal would safeguard the jobs of more than 350 people. Maxim Donde, Lukoil’s vice-president for refined products sales, said “the acquisition of Shell’s high-quality businesses in Russia fits well into Lukoil’s strategy to develop its priority sales channels, including retail, as well as the lubricants business”.

Shell, similarly to rivals BP and ExxonMobil, announced its intention to withdraw from Russia’s oil and gas sector in the face of widespread anger following President Vladimir Putin’s decision to invade Ukraine in February. A dearth of potential buyers given Russia’s growing isolation means few companies have made progress in what is expected to be a difficult divestment process for those international groups seeking an exit. In addition to its downstream business, Shell has a 27.5 per cent stake in the Sakhalin-2 liquefied natural gas project with Gazprom, two other joint ventures with the state-owned company, and a stake in the now-shelved Nord Stream 2 project. Shell chief executive Ben van Beurden insisted last week that the company was making “good progress” in its efforts to divest its Russian assets and stressed that it intended to sell the businesses and not just walk away. Shell declined to disclose the commercial terms of the Lukoil deal. Publicly traded Lukoil, which operated in Ukraine until 2017, is the largest oil producer in Russia after state-backed Rosneft. Founded in 1991 by the then deputy minister for oil production Vagit Alekperov, just as the Soviet Union was unravelling, it is one of Russia’s largest companies. In March it was the first company in the country to denounce publicly the war in Ukraine, calling in a statement on its website for “a speedy cessation of the armed conflict”.

“Lukoil’s board of directors expresses its concern over the ongoing tragic events in Ukraine and its deepest sympathy to all those affected by this tragedy,” it said at the time. Alekperov stepped down in April after 30 years at the helm after western sanctions were imposed against him. The company appointed Vadim Vorobyov, who has worked at Lukoil for the past 25 years, as acting chief executive. The board is expected to take a final decision on the new chief on May 30.

Additional reporting by Nastassia Astrasheuskaya