Shell (RDSA) said Tuesday it is breaking completely with Russia’s giant energy industry, immediately halting all purchases of Russian crude oil and closing its gas stations in the country. The British company, which last week announced it was dumping its investments in Russia, said its decision to divest all trade in Russian fossil fuels was “in line with new government guidance.” unprecedented sanctions imposed by the West in response to President Vladimir Putin’s decision to order his troops to invade Ukraine. But some traders and oil companies are already avoiding Russian crude, and US officials are discussing an import ban. Russian benchmark Urals oil is trading at a discount of $25 a barrel from a couple of dollars before the invasion. Moscow warned late Monday that oil prices could soar to $300 a barrel if the West banned its oil, adding that it could cut natural gas supplies to Germany in response to Berlin’s decision to prevent Russia’s Nord stream – 2″.
“Our actions so far have been based on ongoing discussions with governments about the need to decouple society from Russian energy flows while maintaining energy supply,” Shell CEO Ben Van Beurden said in a statement. “Today’s threats to halt pipeline flows to Europe once again illustrate the difficult choices and potential consequences we face when we try to do so.”
Unless otherwise instructed by governments, Shell said it would immediately stop buying Russian crude on the spot market and would not renew contracts. It is also reconfiguring its supply chain to move away from Russian oil entirely.
“We will do this as quickly as possible, but the physical location and availability of alternatives means it could take several weeks and result in reduced productivity at some of our refineries,” the company said in a statement.
Shell will also immediately begin closing its filling stations, aviation fuels and lubricants operations in Russia in the “safest way” and will begin phasing out petroleum products, pipeline gas and liquefied natural gas from Russia.
Van Beurden said European countries were faced with a dilemma between putting pressure on the Russian government over its actions in Ukraine and ensuring stable and reliable energy supplies.
“But ultimately, it is governments who must decide on the incredibly difficult trade-offs that must be made during the war in Ukraine. We will continue to work with them to help manage the potential security implications for energy supplies, especially in Europe.” he added.
He also apologized for Shell’s decision last week to buy Russian oil for processing into gas and diesel.
“We are well aware that our decision … despite the fact that it was made with security of supply in mind, was the wrong one, and we are sorry,” he said.
Shell said it would funnel profits from the remaining barrels of Russian oil it refines into a fund designed to mitigate the effects of the war on the people of Ukraine.