THE SHELL LEAKS FILES — 31 OCTOBER 2026
SLF-2007-104
The Sakhalin Papers XCIV: The Blending Loophole — Russian Oil in Shell’s Supply Chain After the Apology
By John Donovan — 31 October 2026
On 8 March 2022, Shell apologised for purchasing discounted Russian crude oil and announced its intention to withdraw from Russian hydrocarbons. Yet its trading arrangements continued to permit purchases of certain refined petroleum products containing almost 50% Russian-origin material. Bloomberg exposed the practice in April. Ukraine’s government accused Shell of exploiting an accounting trick. Shell disputed the allegation that it was deliberately purchasing Russian products for blending and resale. On 27 April, Reuters reported that the company had tightened its trading terms to exclude refined products containing any Russian-origin material. The surviving corporate statements, contemporaneous trading reports and official sanctions records reveal what happened — and the important distinction between a contractual loophole, an actual purchase and an unlawful transaction.
Archive reference: SLF-2007-104
Publication date: 31 October 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-103 — The Discounted Cargo, 30 October 2026
Principal documentary evidence: Shell’s announcement of 8 March 2022; Bloomberg’s examination of Shell’s trading terms, 8 April 2022; the letter dated 13 April from Ukrainian presidential adviser Oleg Ustenko, as reported by Bloomberg; Shell’s response reported on 22 April; Reuters’ examination of revised Shell trading terms, 27 April; UK government statements and subsequent sanctions legislation; European Union sanctions records.
Evidence classification: Authenticated corporate statements, contemporaneous reporting based on observed trading bids, attributed government correspondence, official regulatory records and separately identified editorial commentary.
Important evidential limitation: The relevant trading conditions are documented through contemporary Bloomberg and Reuters reporting. The complete original Shell trading contracts, cargo-level transaction records and the original Ukrainian letter have not been independently obtained for this instalment. Their reported contents are distinguished from documents examined directly.
Introduction: When does Russian oil stop being Russian?
The question sounds almost absurd.
If a petroleum product contains Russian oil, surely it remains at least partly Russian.
But international commodity trading does not operate according to such simple definitions.
Petroleum products may be blended with equivalent products originating in other countries.
Crude oil may be refined outside the country where it was extracted.
Cargoes may be transferred between vessels.
Products may pass through several storage terminals, traders and intermediaries before reaching their ultimate purchasers.
The resulting questions concerning origin, ownership and contractual restrictions can become extraordinarily complicated.
In April 2022, those complications became a public-relations crisis for Shell.
The company had already apologised for purchasing Russian crude after the invasion of Ukraine.
It had promised to cease spot purchases of Russian crude and withdraw from Russian hydrocarbons more broadly.
But an examination of its trading terms revealed that certain refined products containing less than 50% Russian-origin material could still qualify for purchase.
The practice became associated with a term used by commodity traders:
The Latvian blend.
Ukraine’s government protested.
Shell defended its conduct.
Then, on 27 April 2022, Shell confirmed that it had changed its purchasing requirements.
The revised conditions excluded refined products containing Russian-origin material, even when blended with products from other countries.
This instalment reconstructs the sequence using contemporary documents and reporting.
The central question is not whether blending petroleum products is inherently unlawful.
It is whether Shell’s purchasing rules adequately reflected its publicly declared commitment to withdraw from Russian hydrocarbons.
The answer requires careful distinctions between established facts, contested allegations and matters that remain unverified.
1. The March apology: What Shell actually promised
On 8 March 2022, Shell issued the statement examined in the previous instalment.
Chief executive Ben van Beurden apologised for purchasing a cargo of Russian Urals crude oil after the invasion.
The company’s announcement went substantially beyond the narrower withdrawal from Russian equity partnerships announced on 28 February.
Shell declared that it intended to withdraw from involvement in Russian hydrocarbons, including crude oil, petroleum products, pipeline gas and liquefied natural gas.
But the announcement contained an important qualification.
The withdrawal would proceed “in a phased manner.”
Shell committed to immediately stopping spot purchases of Russian crude oil.
It also undertook not to renew term contracts.
The company acknowledged that removing Russian crude from its supply chain could take weeks.
Withdrawing from Russian petroleum products, pipeline gas and LNG was expected to take considerably longer.
These distinctions were explicit in Shell’s original statement.
The company was not promising that every existing contractual obligation or physical delivery involving Russian energy would disappear immediately.
Its commitment concerning crude-oil spot purchases was immediate.
Its withdrawal from other Russian hydrocarbons was progressive.
That difference subsequently became central to Shell’s defence of its trading arrangements.
However, the broader public message was clear.
Shell intended to cease its involvement in Russian hydrocarbons.
For a company already facing criticism over its discounted crude-oil purchase, the scope and implementation of that commitment were matters of substantial public interest.
Primary source: Shell’s original announcement, 8 March 2022. Shell
2. A trading condition that changed the meaning of origin
The controversy developed around contractual definitions used in Shell’s trading operations.
In April 2022, Bloomberg columnist Javier Blas examined provisions governing the company’s purchases of petroleum products.
The relevant arrangements distinguished between products classified as Russian-origin and those classified as non-Russian.
The critical issue was the proportion of Russian material in a blended product.
According to Bloomberg’s examination, products containing less than 50% Russian-origin material could fall outside Shell’s contractual definition of Russian-origin products.
A cargo containing 49.99% Russian material and 50.01% material from elsewhere could therefore satisfy the non-Russian-origin condition described in the report.
This was not a claim that Russian oil had physically ceased to exist.
The Russian material remained present.
The issue was how the product was classified for the purposes of Shell’s purchasing conditions.
This distinction requires emphasis.
A private contractual definition of origin is not automatically a rule established by international sanctions law.
There was no universal legal principle under which mixing 49.99% Russian petroleum with 50.01% non-Russian petroleum automatically made every resulting transaction lawful.
The applicable legal position depended on jurisdiction, the particular sanctions in force, the nature of the product, its actual origin and the relevant customs and sanctions rules.
The arrangement reported by Bloomberg concerned Shell’s own trading conditions.
It was therefore primarily a question about corporate purchasing policy and the implementation of Shell’s public commitments.
Bloomberg published its investigation on 8 April 2022.
It became the principal source for the controversy that followed. Bloomberg.com
3. The Latvian blend: A term from the commodity markets
The expression Latvian blend was not the name of a separate geological oil field.
It was a term associated with blending Russian petroleum products with material originating elsewhere.
Bloomberg described commercial arrangements involving Russian diesel transported through Baltic export routes.
The port of Ventspils in Latvia was identified as one location associated with the practice.
Other blending locations mentioned in contemporary reporting included storage facilities in the Netherlands and transfers between vessels.
The commercial principle was relatively straightforward.
A petroleum trader could combine material from different sources to produce a cargo satisfying particular commercial specifications.
Blending is a normal feature of international petroleum trading.
Diesel, jet fuel and other refined products are frequently blended to meet quality specifications, seasonal requirements or contractual conditions.
That practice is not inherently suspicious.
The controversy arises when blending is used, or appears capable of being used, to change how a product’s origin is represented.
In April 2022, origin had become especially important because Russia’s invasion of Ukraine had generated pressure on energy companies to stop purchasing Russian hydrocarbons.
A product containing substantial quantities of Russian diesel could create a commercial and reputational dilemma if it was described as non-Russian solely because the Russian component was below a specified threshold.
The term Latvian blend became shorthand for that dilemma.
But an important qualification is necessary.
The label did not establish that every blended cargo was physically mixed in Latvia.
Nor did it establish that Shell itself operated a blending facility producing such cargoes.
The distinction between a trading-market expression and a verified physical transaction is fundamental. Bloomberg.com
4. Latvia’s response: The geography was also disputed
The Latvian aspect of the controversy received attention from the country’s own media and authorities.
On 12 April 2022, Latvian public broadcaster LSM reported that the relevant authorities intended to examine the circumstances described in Bloomberg’s investigation.
The report referred to possible blending involving Ventspils.
But it also recorded denials from operators associated with the port’s petroleum terminals.
Those operators disputed their involvement in the activities described.
This is an important piece of the documentary record.
The existence of blending arrangements within international petroleum markets does not establish that a specific Latvian company participated in them.
Nor does the use of the expression Latvian blend establish the geographical origin of every product described by that term.
The available reporting therefore supports a limited conclusion.
The controversy prompted scrutiny in Latvia.
Questions were raised about whether blending was taking place through particular facilities.
But the material examined here does not establish a regulatory finding that the named terminal operators had engaged in unlawful conduct.
The geographical allegations should not be treated as proved simply because the market terminology became widely used.
Contemporary source: Latvian Public Media, 12 April 2022 — Authorities Examine Reports of the Latvian Blend.
5. A March 30 trading bid provides a more precise documentary reference
One of the most useful details in the subsequent Bloomberg reporting concerns a specific trading bid.
According to data examined by Bloomberg, Shell sought to purchase ultra-low-sulphur diesel through the S&P Global Platts pricing process on 30 March 2022.
The conditions of the bid excluded Russian-origin cargoes.
However, the accompanying definition permitted blends containing less than 50% Russian-origin material.
This matters because it establishes more than a general allegation about industry practice.
It identifies a particular date, commodity and trading process.
The bid was placed more than three weeks after Shell’s 8 March apology.
But the evidential distinction remains important.
A bid demonstrates the terms on which a company was prepared to purchase.
It does not necessarily establish that the bid resulted in a completed transaction.
Nor does it establish that the resulting cargo, if purchased, contained the maximum amount of Russian material permitted by the conditions.
The figure of 49.99% became prominent because it illustrated the contractual threshold.
It should not automatically be presented as the verified composition of a cargo actually delivered to Shell.
The surviving public reporting identifies the purchasing condition.
It does not provide a complete cargo-by-cargo accounting of deliveries made under that condition.
That limitation prevents an allegation about contractual eligibility from being transformed into an unsupported assertion concerning specific shipments. gCaptain
6. Ukraine’s government challenges Shell again
The controversy attracted a direct response from Ukraine.
In a letter dated 13 April 2022, Oleg Ustenko, chief economic adviser to Ukrainian President Volodymyr Zelensky, challenged Shell’s position.
The letter was addressed to Shell chief executive Ben van Beurden.
Contemporary Bloomberg reporting also identified Shell’s legal director, Donny Ching, as a recipient of questions concerning the company’s trading rules.
The letter expressed concern that Shell’s purchasing conditions appeared to permit continued dealings in products containing Russian petroleum.
Ustenko characterised the arrangement as an accounting device through which companies could continue supporting Russian energy revenues while publicly claiming to have withdrawn.
He described the alleged practice as deplorable.
The letter raised questions concerning the treatment of cargoes containing less than 50% Russian material.
It also sought clarification about whether such cargoes would comply with restrictions in other jurisdictions, including the United States and the United Kingdom.
Another question concerned the quantities of blended oil Shell might still be lifting from Russian ports under longer-term arrangements.
These were important questions.
They went beyond the immediate issue of a purchasing condition.
They sought to establish whether Shell’s contractual definitions were consistent with the practical consequences of its public withdrawal commitment.
The criticism also followed an earlier confrontation.
In March, Ukraine’s foreign minister, Dmytro Kuleba, had condemned Shell’s purchase of discounted Russian crude.
The April letter therefore represented a second major Ukrainian challenge to Shell’s Russian petroleum trading activities.
However, the letter was an expression of the Ukrainian government’s concerns and allegations.
It was not a judicial finding.
Its contents were reported by Bloomberg and other contemporary media organisations.
The original signed letter has not been independently examined for this instalment.
That distinction is retained. gCaptain
7. Shell’s response: The company disputed the central accusation
Shell did not accept the suggestion that it was deliberately purchasing Russian products for blending and resale under a non-Russian label.
In a response reported by Bloomberg on 22 April, a Shell spokesperson denied that the company had purchased products exported from Russia for that purpose after its 8 March withdrawal announcement.
The company also said it had stopped spot purchases of Russian crude and LNG.
Shell stated that it had eliminated the vast majority of spot purchases of refined products that might contain Russian material blended earlier in the supply chain.
This response deserves careful treatment.
Shell was making a specific denial concerning deliberate purchases of products exported from Russia for blending and subsequent resale as non-Russian.
That is not identical to denying that its contractual terms had contained the 50% definition.
Nor is it identical to claiming that every petroleum product purchased anywhere in its supply chain was completely free of Russian material.
The company acknowledged that refined products could contain Russian-origin components introduced earlier in the supply chain.
It also maintained that it was working to reduce and eliminate those exposures.
The distinction is significant.
The company’s response supports the conclusion that Shell regarded the withdrawal as an ongoing process.
It also illustrates why the contractual wording attracted criticism.
A company could intend to eliminate Russian petroleum while retaining purchasing conditions that permitted some Russian-origin material in blended products.
Whether particular transactions were consistent with the company’s commitments depended upon their actual circumstances.
Shell’s statement cannot independently establish that every transaction complied with its policy.
Equally, the existence of permissive contractual language does not establish that Shell deliberately purchased Russian oil to disguise its origin.
Both propositions would require additional transaction-level evidence.
Contemporary source: Bloomberg — Ukraine Criticizes Shell’s Rules on Russian Fuel Purchases, 22 April 2022.
8. The Donovan–Shell archive preserved the controversy as it unfolded
An important feature of this investigation is that RoyalDutchShellPlc.com was recording the developments in April 2022.
The archive contains contemporary articles examining the Latvian blend controversy, Ukraine’s objections and Shell’s response.
On 22 April, the website published a report from City A.M. describing the Ukrainian government’s accusations and Shell’s denial.
Other contemporary coverage preserved by the archive included reporting from The Telegraph and the Daily Mail.
The archive subsequently published Reuters’ account of Shell tightening its trading terms on 27 April.
These records are valuable because they establish what was being publicly reported at the time.
They also help preserve the sequence of events.
This is particularly important when investigating corporate controversies retrospectively.
A later account can sometimes compress several distinct events into a single narrative.
The original reports show a more complicated progression.
Shell’s withdrawal announcement came first.
The contractual definition attracted scrutiny.
Bloomberg’s investigation brought the issue into wider public discussion.
Ukraine’s government challenged Shell.
Shell responded.
The company then tightened its trading requirements.
The archival record also demonstrates why contemporaneous reporting should be preserved with its original date and attribution.
The City A.M. report and the Bloomberg account do not constitute separate independent confirmation of every allegation.
Both drew upon the same underlying controversy and statements.
Their value lies in documenting the developing public record.
Contemporary archive: Ukraine’s Government Writes to Shell, Accusing It of an Accounting Trick — 22 April 2022.
9. Wednesday, 27 April: Reuters documents the change
The most decisive development came on 27 April 2022.
Reuters journalists Ron Bousso and Rowena Edwards reported that Shell had tightened its purchasing restrictions.
The company would no longer accept refined petroleum products containing Russian-origin material, including blended fuels.
Reuters had examined a bid placed by Shell for a cargo of jet fuel through the Platts trading process.
The new conditions prohibited Russian-origin products.
They also prohibited products blended with material produced in Russia.
The conditions extended to the transportation route, excluding arrangements involving Russian transit.
This was materially different from the earlier threshold.
Under the previous conditions described by Bloomberg, a cargo containing less than 50% Russian material could satisfy the origin requirement.
Under the new conditions reported by Reuters, Russian-origin material was excluded regardless of its proportion in the blend.
A Shell spokesperson confirmed that the trading terms had changed.
The company described the amendment as another stage in removing Russian oil and gas from its supply chain.
Reuters also noted an important limitation.
The revised refined-product conditions did not themselves alter the separate arrangements concerning Russian crude oil, which Shell was continuing to phase out.
This distinction is essential.
Shell had tightened its purchasing rules for blended refined products. That did not mean every remaining Russian crude-oil contract had been extinguished.
The article was published by Reuters on 27 April and appeared in several international publications.
RoyalDutchShellPlc.com preserved the report that evening. Investing.com UK
10. What the new trading conditions actually established
The revised language was more demanding than the earlier contractual definition.
It did not merely require a non-Russian origin designation.
It addressed the possibility that a product had been blended with material originating in Russia.
It also covered aspects of the transportation route.
These conditions were significant because they moved beyond a simple percentage threshold.
But the wording should still be interpreted carefully.
The Reuters report establishes that the new conditions appeared in a particular trading bid.
It establishes that a Shell spokesperson confirmed the tightening of the company’s purchasing terms.
It does not establish the contents of every subsequent Shell trading contract.
Nor does it prove that every supplier could independently verify the complete origin of every component in every product.
Contractual restrictions and physical traceability are different questions.
A contract may require a seller to certify that a product contains no Russian-origin material.
Whether that certification is reliable depends upon the seller’s records and the wider supply chain.
For blended petroleum products, the relevant evidence could include certificates of origin, bills of lading, refinery records, storage-terminal records and contractual declarations.
Some of those documents may be difficult to reconcile where material has passed through several intermediaries.
Shell’s revised terms therefore represented a more restrictive purchasing policy.
They did not, by themselves, establish that the global petroleum supply chain had become fully traceable.
This distinction would become particularly important in the company’s subsequent public comments.
11. Was the Latvian blend a sanctions loophole?
The expression sanctions loophole appeared frequently in reporting about Russian petroleum.
But it requires legal precision.
On 27 April 2022, the European Union had not yet adopted the comprehensive Russian oil-import restrictions included in its sixth sanctions package.
Those measures were announced on 3 June 2022.
The EU subsequently introduced phased prohibitions concerning seaborne Russian crude oil and refined petroleum products.
The restrictions included specified transitional periods and exceptions.
The United Kingdom had announced on 8 March that it would phase out Russian oil imports by the end of 2022.
The principal UK prohibition on importing Russian oil and oil products subsequently took effect on 5 December 2022.
The legal environment in April was therefore different from that which developed later.
Companies were already subject to sanctions affecting particular Russian individuals, institutions and activities.
But Russian petroleum products were not universally prohibited across all relevant European markets.
A company could face substantial public criticism for purchasing Russian-origin petroleum even when a particular purchase was not prohibited by the sanctions then applicable.
That is the distinction at the centre of this controversy.
Shell’s 50% definition was a contractual purchasing condition.
It should not be represented as a statutory exemption permitting violations of sanctions.
Nor should later sanctions restrictions be applied retrospectively to a transaction from March or April 2022.
There is another relevant distinction.
Customs rules concerning the origin of products can involve questions about processing and substantial transformation.
Simply mixing products and refining crude oil are not necessarily equivalent for origin purposes.
The applicable rules depend upon the legislation and the circumstances of the particular product.
The 49.99% threshold should therefore not be confused with a universal legal test of whether Russian petroleum had ceased to be Russian.
Official sources: UK Government — Phase-out Announcement, 8 March 2022; Council of the European Union — Sixth Sanctions Package, 3 June 2022; and UK Government — Russian Oil Import Ban and Implementation Guidance.
12. The wider industry: Shell was not operating in isolation
The problem of Russian-origin petroleum was not confined to Shell.
International fuel markets relied upon extensive networks of producers, refiners, traders, terminals and transport companies.
Europe had been a major importer of Russian crude and refined products before the invasion.
According to Eurostat data cited by Reuters, Russia supplied slightly more than a quarter of the European Union’s oil imports in 2020.
Diesel and jet fuel were particularly important.
As companies began restricting Russian purchases, alternative supplies had to be obtained from other producers and refineries.
That involved shipping capacity, refinery compatibility, storage and financing.
In these circumstances, the origin of blended petroleum products became increasingly important.
Reuters reported on 27 April that TotalEnergies, Repsol and BP had adopted restrictions excluding refined products containing Russian material.
Shell’s revised conditions therefore brought its publicly reported purchasing requirements closer to those of several major competitors.
But it would be misleading to assume that every international energy company adopted identical policies at the same time.
Companies had different contractual obligations and geographical operations.
Their exposure to Russian crude, refined products, LNG and pipeline gas also differed.
Some retained long-term contracts while discontinuing new purchases.
Others were primarily affected by investments in producing assets.
The wider industry context helps explain why removing Russian-origin petroleum from international markets proved difficult.
It does not determine whether Shell’s earlier contractual definition was commercially or ethically appropriate.
That is a separate question. euronews
13. The UK import figures reveal another difficulty
Official UK trade statistics provide useful retrospective context.
On 24 August 2022, the Office for National Statistics reported that the United Kingdom had imported no fuels from Russia during June.
It was the first month without such recorded imports since the relevant statistical series began in January 1997.
The figures showed a dramatic reduction following Russia’s invasion.
Before the war, Russia had supplied approximately 24.1% of the UK’s refined-oil imports in 2021.
The ONS attributed the subsequent decline to sanctions and companies voluntarily seeking alternative suppliers.
This was an important development.
It demonstrated that direct recorded fuel imports from Russia had fallen dramatically.
However, the figures should not be interpreted as proof that every petroleum product consumed in Britain was entirely free of Russian-origin material.
Trade statistics depend upon the classifications and origin information used in recording international transactions.
A product refined in another country may be recorded differently from the Russian crude oil used as an input.
The issue becomes particularly complicated when the original feedstock has passed through a foreign refinery.
The ONS statistics therefore establish the reduction in recorded imports from Russia.
They do not provide complete molecular traceability of the entire British petroleum supply chain.
That limitation is important when assessing the longer-term effectiveness of policies intended to exclude Russian-origin hydrocarbons. Office for National Statistics
14. The unresolved question: What was actually purchased?
This investigation has identified a clear sequence of documentary evidence.
Shell publicly committed itself to withdrawing from Russian hydrocarbons.
Its purchasing conditions subsequently attracted criticism because they permitted certain blended refined products containing less than 50% Russian material.
Ukraine’s government challenged those conditions.
Shell disputed allegations that it was deliberately purchasing Russian products for blending and resale under a non-Russian designation.
Reuters then documented a change to more restrictive trading terms.
But several potentially important records remain unavailable.
The complete earlier contractual conditions would help establish precisely how Shell defined Russian-origin material across different products and transactions.
The relevant trading bids would help clarify the circumstances in which those terms were used.
Cargo-level records would establish whether purchases were completed, what products were delivered and what their actual compositions were.
Shipping and storage-terminal records could identify the origin and movements of specific quantities of material.
Internal Shell correspondence could explain why the earlier threshold was adopted and what prompted its subsequent removal.
Without those records, it would be premature to claim that Shell deliberately engineered particular shipments to evade sanctions.
It would also be premature to assert that no products containing Russian-origin material were acquired under the earlier conditions.
The available evidence supports a narrower and more reliable conclusion.
Shell’s publicly reported trading conditions permitted certain Russian-containing blends after its March withdrawal announcement. The company subsequently tightened those conditions following public scrutiny and criticism.
That is an important finding.
It does not require speculation about transactions that have not been independently established.
DOCUMENTARY FINDINGS
Established facts
Shell announced its intention to withdraw from Russian hydrocarbons on 8 March 2022.
The company immediately committed to ending spot purchases of Russian crude while acknowledging that withdrawal from other products and contracts would take longer.
Bloomberg reported on 8 April that Shell’s trading conditions could classify blended petroleum products containing less than 50% Russian-origin material as non-Russian.
A Shell bid for ultra-low-sulphur diesel dated 30 March was subsequently identified in Bloomberg reporting as using the relevant origin definition.
The expression Latvian blend became associated with the practice of mixing Russian petroleum products with material from other countries.
Latvian authorities and media examined questions arising from the reporting.
Operators associated with Ventspils disputed their involvement in the alleged activities.
Oleg Ustenko, an adviser to Ukraine’s president, challenged Shell’s purchasing conditions in a letter dated 13 April.
Shell disputed the allegation that it was purchasing Russian products for deliberate blending and resale as non-Russian.
On 27 April, Reuters reported that Shell had tightened its trading conditions to exclude refined products containing Russian-origin material.
Reuters examined a jet-fuel trading bid containing the revised conditions.
A Shell spokesperson confirmed the change.
The revised terms did not automatically terminate every remaining Russian crude-oil contract.
The relevant comprehensive EU oil restrictions were introduced after the April controversy.
Matters requiring qualification
The 49.99% figure illustrates the contractual threshold. It is not independently established as the composition of every cargo purchased by Shell.
A trading bid is evidence of an offer or purchasing condition, not necessarily a completed transaction.
The available documents do not establish that Shell itself physically blended Russian petroleum with other products.
They do not establish that all cargoes described as Latvian blends originated in Latvia.
The original Ukrainian letter has been reported by reputable contemporary sources, but the complete signed document has not been independently examined for this instalment.
The complete original Shell contracts and associated cargo documentation have not been obtained.
Legal position
No court judgment specifically determining Shell’s liability in relation to the April 2022 blending arrangements has been identified in the materials examined.
The documentary evidence does not establish that Shell violated sanctions through the reported contractual definition.
The commercial and ethical controversy must be distinguished from the legal status of particular transactions.
A private 50% origin threshold was not a universal exemption under sanctions law.
Not established
The available evidence does not prove that Shell deliberately designed the blending arrangements to circumvent sanctions.
It does not establish that particular Shell executives ordered traders to conceal Russian petroleum.
It does not establish the quantity or value of Russian-origin products actually acquired under the disputed conditions.
It does not establish that Shell knowingly submitted false declarations of origin.
Nor does it establish that the change announced on 27 April immediately eliminated every indirect Russian-origin component from the company’s global supply chain.
EDITORIAL COMMENTARY
The difference between leaving Russia and removing Russia from the supply chain
This episode exposes an important distinction between a company’s public commitments and the operational systems through which those commitments must be implemented.
Shell’s March announcement was an expression of corporate intention.
Its trading conditions governed the circumstances in which commercial transactions could proceed.
The two were related, but they were not identical.
The company intended to withdraw from Russian hydrocarbons.
Its earlier purchasing terms nevertheless permitted some refined products containing Russian-origin material.
That was sufficient to generate substantial criticism, even without proof that Shell had intentionally purchased specific cargoes to conceal their origin.
The Ukrainian government’s objection was understandable within the circumstances of the war.
Ukraine was seeking to reduce Russian energy revenues.
From that perspective, purchasing a product containing substantial quantities of Russian petroleum could still indirectly support Russian exports, regardless of how the finished product was classified.
Shell’s response reflected another concern.
The company was attempting to disentangle itself from complex supply chains while maintaining fuel availability for customers.
That concern also had a legitimate commercial basis.
European dependence upon Russian petroleum could not be eliminated merely by issuing a corporate announcement.
Refineries required feedstocks.
Traders were subject to existing contracts.
Customers continued to need fuel.
The difficulty was real.
But so was the reputational risk.
A company that publicly declares an intention to stop dealing in Russian hydrocarbons creates expectations about its subsequent conduct.
Those expectations extend beyond the narrow wording of individual announcements.
If commercial purchasing conditions permit substantial Russian content, the company must be prepared to explain why those arrangements remain consistent with its commitment.
In Shell’s case, that explanation was challenged.
The company subsequently tightened its trading requirements.
The documentary record does not establish whether criticism was the sole reason for that decision.
But the change is clear.
The importance of the original documents
The episode also demonstrates why contemporaneous records matter.
The public statements explain Shell’s declared policy.
Bloomberg’s reporting identifies the earlier contractual threshold.
The Ukrainian letter records the government’s objections, as reported by contemporary journalists.
Shell’s response explains what the company disputed.
Reuters’ investigation establishes the subsequent tightening of the purchasing conditions.
Official government records clarify the legal environment.
Each source answers a different question.
None should be made to answer questions beyond its evidential scope.
Most importantly, the Reuters report of 27 April should not be treated as proof that Shell had previously committed a sanctions offence.
It is evidence that Shell changed its trading terms.
Equally, the company’s statement that it was acting lawfully does not resolve every question about whether the earlier arrangements were consistent with the spirit of its withdrawal commitment.
Legal compliance and corporate accountability are related but distinct considerations.
A conclusion supported by the evidence
The March apology did not instantly remove Russian-origin petroleum from every part of Shell’s international trading arrangements.
By April, the company’s purchasing terms still permitted certain blended refined products containing less than 50% Russian material.
Those terms attracted criticism.
Shell disputed the suggestion that it was deliberately purchasing Russian products for disguised resale.
The company then changed its purchasing requirements.
This is the central documentary finding: Shell’s withdrawal from Russian energy involved successive revisions to its commercial practices, rather than a single immediate break.
That conclusion is supported by Shell’s statements and contemporaneous reporting.
It requires no allegation of secret criminal conduct.
But the controversy also points towards a more difficult problem.
Even when a company excludes products blended directly with Russian petroleum, what happens when Russian crude is refined in another country before the resulting diesel or jet fuel enters international markets?
That question cannot be answered simply by examining the percentage of Russian material in a blended cargo.
It concerns the fundamental ability of international commodity markets to trace petroleum back to its original source.
And Shell’s own chief executive would soon acknowledge just how difficult that could be.
PRINCIPAL SOURCES
1. Shell plc — Shell Announces Intent to Withdraw From Russian Oil and Gas, 8 March 2022
The authenticated corporate announcement establishing the distinction between the immediate halt to Russian crude spot purchases and the phased withdrawal from other Russian hydrocarbons.
Read Shell’s original announcement
2. Bloomberg Opinion — Javier Blas, The Backdoor That Keeps Russian Oil Flowing Into Europe, 8 April 2022
The contemporary investigation describing the 49.99% contractual threshold and the trading-market expression Latvian blend. This is an attributed Bloomberg analysis, not an independent judicial finding.
Read the Bloomberg investigation
3. Latvian Public Media — Investigation of Reports Concerning the Latvian Blend, 12 April 2022
Reports Latvian authorities’ interest in the allegations and records denials from operators associated with the Ventspils petroleum terminals.
Read the original Latvian report
4. Bloomberg — Laura Hurst, Ukraine Criticizes Shell’s Rules on Russian Fuel Purchases, 22 April 2022
Documents the letter dated 13 April from Oleg Ustenko, the March 30 trading-bid conditions and Shell’s response to the Ukrainian government’s allegations.
Read the Bloomberg report reproduced by gCaptain
5. RoyalDutchShellPlc.com — Ukraine’s Government Writes to Shell, Accusing It of an Accounting Trick, 22 April 2022
The contemporary Donovan–Shell archive preserves the City A.M. account of the dispute and Shell’s denial.
Read the original archive entry
6. Reuters — Ron Bousso and Rowena Edwards, Shell Tightens Restrictions on Russian Oil Buying, 27 April 2022
The central contemporary report establishing the revised trading conditions, the Platts jet-fuel bid and Shell’s confirmation of the change.
7. RoyalDutchShellPlc.com — Shell Tightens Restrictions on Russian Oil Buying, 27 April 2022
The contemporary Donovan–Shell archive’s complete reproduction of the Reuters account.
Read the original archive publication
8. UK Government — UK to Phase Out Russian Oil Imports, 8 March 2022
The official announcement establishing the initial British policy of ending Russian oil imports by the end of 2022.
Read the UK government statement
9. Council of the European Union — Sixth Sanctions Package, 3 June 2022
The official record of the EU’s subsequent Russian oil-import restrictions and their phased implementation.
10. Office for National Statistics — The Impact of Sanctions on UK Trade With Russia, 24 August 2022
Official statistics documenting the reduction in recorded Russian fuel imports and providing context concerning Britain’s former dependence on Russian refined petroleum.
Documentary disclaimer
This instalment relies upon authenticated Shell corporate statements, contemporary Bloomberg and Reuters reporting, official UK and European Union records, Latvian public-media reporting and contemporary material preserved by RoyalDutchShellPlc.com.
The earlier Shell trading conditions are documented through published reporting concerning observed trading bids. The complete original contracts and cargo-level transaction records have not been independently examined.
The correspondence from Ukrainian presidential adviser Oleg Ustenko is identified through contemporaneous reporting. The original signed letter has not been independently obtained.
The Ukrainian government’s allegations concerning an accounting trick are reported as allegations.
Shell’s contemporaneous denials and explanations are included.
The existence of contractual terms permitting some Russian-origin material is distinguished from proof that particular cargoes were delivered under those terms.
No allegation is made that Shell deliberately falsified certificates of origin, knowingly breached sanctions or committed a criminal offence through the reported arrangements.
The term Latvian blend is identified as contemporary commodity-market terminology. It does not constitute proof of misconduct by any specific Latvian company or terminal operator.
The article distinguishes the contractual purchasing restrictions adopted voluntarily by Shell from sanctions imposed by governments.
Later sanctions legislation is not applied retrospectively.
The revised trading conditions announced on 27 April 2022 are not presented as evidence that every existing contractual relationship involving Russian energy was immediately terminated.
Editorial commentary concerning the consistency of Shell’s public commitments and commercial practices is separately identified.
Factual corrections, additional primary documents and responses from Shell or other interested parties are welcome.
The website’s general disclaimer also applies.
NEXT IN THE SHELL LEAKS FILES
SLF-2007-105 — The Sakhalin Papers XCV: The Molecule Problem — Russian Crude Refined Abroad and the Limits of Shell’s Clean Break
On 27 April 2022, Shell tightened its trading conditions to exclude refined petroleum products containing Russian-origin material.
It appeared to close the most controversial aspect of the Latvian blend arrangements.
But eight days later, on 5 May, Shell chief executive Ben van Beurden publicly explained a far more difficult problem.
There was no comprehensive international system capable of tracing every petroleum product back to the country in which its original crude oil had been extracted.
The distinction mattered.
Russian crude could be exported to a country outside Europe.
A refinery in that country could process it into diesel, petrol or jet fuel.
The resulting petroleum products could then enter international markets under the origin rules applicable to the refined goods.
Van Beurden used the example of diesel produced at an Indian refinery from Russian crude.
The product could be treated as Indian diesel for the purposes he was discussing.
His comments were reported by Reuters and S&P Global Commodity Insights.
They raised an uncomfortable question.
How could Shell promise to eliminate Russian-origin petroleum from its supply chain when its own chief executive acknowledged that the global system could not reliably trace every refined product back to its original crude-oil source?
The answer requires examining the difference between physical origin, customs origin, contractual representations and the practical limits of commodity-market traceability.
It also requires distinguishing an unavoidable limitation of international refining from deliberate sanctions evasion.
The next instalment will examine Shell’s 5 May 2022 statements, the contemporaneous industry reporting and the regulatory framework governing petroleum refined outside Russia.
The question is not whether Shell changed its purchasing rules.
That is established.
The question is whether those rules could ever guarantee what the company’s public commitments appeared to promise.
The Sakhalin Papers continue.
Documentary starting point for the next investigation: S&P Global Commodity Insights — Shell Flags Industry Hurdles to Blocking All Russian Imports Into the EU, 5 May 2022.
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