International energy major Royal Dutch Shell has decided not to complete a deal on a Russian Arctic oil joint venture, Meretoyakha Neftegaz, it was expected to enter with Gazprom Neft, because of some “external” factors.

Total resources at fields of Meretoyakha Neftegaz were valued by Gazprom Neft at 1.1 billion tonnes (over 8 billion barrels of oil).

The decision has been taken against the background of falling global investments into energy projects over weak oil and gas demand and prices amid the global economic downturn, overproduction and the spread of the coronavirus.

“Due to challenging external environment Shell will not pursue the completion of the deal to create a joint venture on the basis of Meretoyakha Neftegaz,” Shell said in a comment sent to Reuters.

The Yamal region is key for Russian oil and gas production. It accounts for more than one fifth of global natural gas reserves.

The deal, to set up a 50/50 joint venture to tap oil in the Yamal-Nenets region was signed in summer 2019 at a Russian business forum. It was expected to be completed by early 2020.

Gazprom Neft said it would pursue the development of the project alone.

Both companies are still involved in another oil project in Russia, Salym Petroleum Development.