Russia’s state-controlled gas giant Gazprom has reshuffled the ownership structure of Portovaya LNG, its sole liquefied natural gas export facility in the northwest of the country, ceding a 50% interest in the project to the country’s leading financial institution, Gazprombank.

Despite its name, Gazprom only has a 30% stake in Gazprombank, with the remaining shares reportedly in the hands of privately owned Russian companies, one of which, according to the Russian edition of Forbes magazine, is related to Russian businessman Yuri Kovalchuk.

Russian corporate registration records show that Portovaya LNG is now operated by JV Portovaya, in which Gazprom’s Invest RGK subsidiary and Status LLC, a wholly owned subsidiary of Gazprombank, each have a 50% interest, Moscow-based news agency Interfax said.

Previously, Gazprom had a 100% share in the project, which sits on the Baltic Sea next to a pipeline feeding gas to the now non-operational onshore gas transmission station that served the Nord Stream 1 subsea gas pipeline to Germany.

Commissioned in September 2022, the Portovaya LNG plant has a production capacity of about 1.5 million tonnes (2 billion cubic metres) per annum of LNG.

The project is understood to have been operating at full nameplate capacity since start-up due to high European demand for LNG.

Gazprom halted most of its piped gas shipments to Europe in the second half of 2022.

In 2023, according to estimates, Gazprom’s gas pipeline shipments to Europe may have fallen by another 56%, to 28.3 Bcm, Reuters said.

About half of that volume was supplied via Ukraine, with the remainder coming through the TurkStream subsea gas pipeline across the Black Sea, Turkey and Bulgaria.

Gazprom has not commented on the rationale for the transaction.

Last year, prices for European gas spot contracts at the TTF hub fluctuated between €35 and €87 per megawatt hour, or about $400 to $1000 per thousand cubic metres. That suggests possible sales revenues for Portovaya LNG of about $1.4 billion based on the annual price average at the TTF hub.

A partner in Moscow-based consultancy RusEnergy, Mikhail Krutikhin, has suggested that by ceding interest in the project, Gazprom may also be looking to shield this profitable venture from potential sanctions.

Along with his interest in Gazprombank, Kovalchuk is also a major shareholder in St. Petersburg-headquartered Bank Rossiya, one of Russia’s leading financial institutions, according to Forbes.

In December, Bank Rossiya obtained significant minority stakes in three gas-producing ventures with Gazprom, following an order by President Vladimir Putin.

Bank Rossiya and Kovalchuk are under international sanctions imposed after the Russian annexation of Crimea in 2014 and the invasion of Ukraine in February 2022.