UK major Shell plc said it intended to withdraw from involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas in a phased manner, aligned with new government guidance.
The now London-based company said that as an immediate first step, it would stop all spot purchases of Russian crude oil and would close its filling stations as well as jet fuel and lubricants operations in Russia.
The latest Shell statement follows last week’s moves to end involvement in the Nord Stream II natural gas pipeline project and to exit its equity partnerships with Russian gas giant Gazprom and related entities.
These included ending its 27.5 percent stake shareholdings in the Sakhalin-II LNG export facility in the Russian Far East, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture.
“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel - despite being made with security of supplies at the forefront of our thinking - was not the right one and we are sorry,” declared Shell Chief Executive Ben van Beurden.
“As we have already said, we will commit profits from the limited, remaining amounts of Russian oil we will process to a dedicated fund,” he added.
“We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine,” stated Van Beurden.
Discussions
Shell also explained that its actions to date had been guided by “continuous discussions with governments” about the need to disentangle society from Russian energy flows, while maintaining energy supplies.
The company said that threats to stop pipeline flows to Europe further illustrated the “difficult choices and potential consequences” that are being faced.
Shell plans to immediately stop buying Russian crude oil on the spot market and we will not renew term contracts.
“At the same time, in close consultation with governments, we are changing our crude oil supply chain to remove Russian volumes,” said the company.
“We will do this as fast as possible, but the physical location and availability of alternatives mean this could take weeks to complete and will lead to reduced throughput at some of our refineries,” it added.
Shell is now implementing a “phased withdrawal” from Russian petroleum products, pipeline gas and LNG.
“This is a complex challenge. Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer,” it stated.
Van Beurden also declared that ultimately, it was for governments to 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 impacts on the security of energy supplies, particularly in Europe,” the CEO concluded.
