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Ukraine war: Shell turns its back on all Russian oil and gas and says ‘sorry’ for purchases last week

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Ukraine war: Shell turns its back on all Russian oil and gas and says ‘sorry’ for purchases last week

The firm says its decision holds “potential consequences” as market experts warn that it will be impossible to replace Russian oil and gas volumes if it is stripped away under US proposals for a wider boycott.

: Business reporter : Tuesday 8 March 2022 

Shell has revealed further plans to turn its back on Russia over the invasion of Ukraine by saying it will stop “all involvement” with the country’s oil, gas and other hydrocarbon products.

The UK-based oil and gas giant’s chief executive announced the decision after a backlash over a Russian oil deal last week as sanctions gathered intensity, prompting the company to pledge that the profits would go to Ukraine relief efforts.

Ben van Beurden said on Tuesday: “We are acutely aware 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.”

Shell said on Tuesday that it would halt all spot purchases of Russian crude oil as an immediate first step, as part of a phased exit plan that would also include the closure of its 500 branded service stations.

The company had already revealed a week ago that it intended to end its involvement in the Nord Stream 2 pipeline project and exit its equity partnerships with Gazprom, including its 27.5 % stake in the Sakhalin-II liquefied natural gas facility.

There has been only a lukewarm response from European nations as such a move would drastically affect natural gas supplies in countries which are intensive users of Russian gas including Germany, Italy and Greece.

The very idea of such a boycott has rampaged through gas and oil markets this week – with the UK contract for next month delivery hitting record levels.

Mr van Beurden said Shell’s measures would take some time to complete and it was a delicate balancing act amid widespread industry warnings that it would be impossible for Europe to replace all Russian supply.

He added: “Our actions to date have been guided by continuous discussions with governments about the need to disentangle society from Russian energy flows, while maintaining energy supplies.

“Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this.”

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said of the company’s move: “‘Shell’s apology for buying Russian oil shows just how strong the winds of change are blowing through the corporate world.

“After coming under huge criticism over the weekend for snapping up a shipment of Russian crude at a bargain price, the company is putting reputation before immediate profits.”

She added: “Shell is still set to remain an oil and gas giant for decades, but by taking this stance and exiting the Russian markets with a continued focus on renewables, it should help reduce the risk of the company ending up in the ethical waste bin.

“However, there will be pressure on Shell to keep up a concerted effort to fully open the sustainable pipeline.'”

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