THE SHELL LEAKS FILES — 1 NOVEMBER 2026
SLF-2007-105
The Sakhalin Papers XCV: The Molecule Problem — When Russian Crude Became “Indian Diesel” and Europe Rewrote the Rules
By John Donovan — 1 November 2026
On 5 May 2022, Shell chief executive Ben van Beurden acknowledged a fundamental weakness in efforts to exclude Russian petroleum from international markets. Once Russian crude had been refined in another country, he explained, there was no worldwide system capable of tracing individual fuel molecules back to their geological origin. Diesel produced in India from Russian crude could consequently be classified as Indian diesel. Four years later, the European Union has introduced legislation specifically targeting petroleum products refined in third countries from Russian crude. The authenticated Shell statements, contemporary Reuters reporting and subsequent EU legal instruments reveal how a problem identified publicly by Shell in 2022 became the subject of binding European import restrictions in 2026.
Archive reference: SLF-2007-105
Publication date: 1 November 2026
Collection: The Sakhalin Papers — Shell, Gazprom and Russia
Previous instalment: SLF-2007-104 — The Blending Loophole, 31 October 2026
Principal documentary evidence: Shell’s announcement of 8 March 2022; Shell’s first-quarter results of 5 May 2022; Reuters and S&P Global Commodity Insights reporting of 5 May 2022; Shell’s 2022 year-end financial disclosures; the European Union’s sixth sanctions package of 3 June 2022; Council Regulation (EU) 2025/1494; the European Commission’s June 2026 implementation guidance; the EU’s 21st sanctions package of 23 July 2026.
Evidence classification: Authenticated Shell corporate announcements and financial statements; attributed contemporaneous executive remarks; independent financial and commodity-market reporting; official EU legislation and regulatory guidance; separately identified editorial commentary.
Evidential qualification: Van Beurden’s remarks are documented through independent contemporary reporting. They were not presented as a formal Shell undertaking guaranteeing the absence of Russian-origin crude from every refined product. No cargo-level evidence has been identified establishing that Shell knowingly violated sanctions through purchases of third-country refined products.
Introduction: The problem hidden inside a barrel of diesel
On 27 April 2022, Shell tightened its trading conditions to exclude refined petroleum products containing Russian-origin material.
The decision followed controversy over the company’s earlier purchasing rules, which had permitted certain blended fuels containing less than 50% Russian material.
Reuters documented the change.
Shell confirmed that it was tightening its conditions as part of its withdrawal from Russian hydrocarbons.
At first sight, the revised rules appeared to settle the issue.
Russian-origin petroleum was no longer acceptable simply because it had been mixed with products from another country.
But there was a much more complicated problem.
What happened when Russian crude oil was refined abroad?
A cargo of Russian crude could be shipped to India, processed in an Indian refinery and converted into diesel.
The diesel could then be exported to Europe.
Under relevant origin rules operating at the time, the resulting product might be classified as Indian rather than Russian.
The material had undergone substantial processing.
It was no longer the original crude oil.
And the international petroleum supply chain lacked a universal system for establishing the geological origin of every component of the resulting fuel.
On 5 May 2022, Shell’s chief executive publicly acknowledged the difficulty.
His remarks were reported by Reuters and S&P Global Commodity Insights.
The significance of those statements has become clearer with the passage of time.
In July 2025, the European Union adopted restrictions specifically designed to prevent Russian crude from reaching European markets after being refined in third countries.
The prohibition took effect on 21 January 2026.
The problem Shell identified in May 2022 had become the subject of an explicit European legal restriction.
The history of that development is the subject of this instalment. euronews
1. The setting: Shell announces extraordinary quarterly profits
The relevant remarks were made on Thursday, 5 May 2022.
Shell had just announced its first-quarter financial results.
The figures were substantial.
Adjusted earnings reached:
US$9.130 billion.
Cash flow from operating activities amounted to:
US$14.815 billion.
Income attributable to Shell shareholders was approximately:
US$7.116 billion.
These were different financial measures and should not be confused.
Adjusted earnings excluded identified items, including significant charges associated with Shell’s withdrawal from Russia.
The company recorded approximately $3.9 billion in post-tax Russia-related charges during the quarter.
The financial results reflected exceptionally strong conditions in international energy markets.
Oil and gas prices had increased substantially.
Shell’s trading businesses benefited from volatility and changing market conditions.
The company’s Chemicals and Products division also reported significantly improved refining and trading margins.
The war in Ukraine was contributing to major disruptions in international energy supplies.
Shell was simultaneously recognising substantial losses on Russian investments and generating considerable earnings elsewhere.
The company’s chief executive acknowledged that the war represented a human tragedy and had caused serious disruption to global energy markets.
It was against this background that journalists questioned him about Russian oil.
The subject was especially sensitive because Shell had apologised for purchasing a discounted Russian crude cargo in March.
It had subsequently tightened its petroleum purchasing conditions in April.
Now the company’s chief executive was addressing a problem that neither decision could resolve completely.
Authenticated corporate source: Shell plc — First Quarter 2022 Unaudited Results, 5 May 2022.
2. The Reuters report: Shell acknowledges a tracing problem
On 5 May 2022, Reuters reported Van Beurden’s remarks concerning Russian crude refined in other countries.
The report appeared under the headline:
Shell CEO: No Way to Trace Russian Crude Refined Overseas.
The central point concerned the practical limits of identifying the origin of petroleum after industrial processing.
Van Beurden explained that the world did not possess a comprehensive system for tracing individual fuel molecules back to their original geological source.
His illustration concerned an Indian refinery.
Russian crude could enter the refinery.
The refinery could process it into diesel.
That diesel could then be exported internationally.
Under the origin treatment he was describing, it could be regarded as Indian diesel.
This was not a hypothetical problem invented by campaigners.
It was publicly acknowledged by the chief executive of one of the world’s largest international energy companies.
The Reuters report also distinguished between Shell’s withdrawal from new Russian oil trading and the process of unwinding existing long-term contracts.
This distinction mattered because Shell had not promised that every historical contractual obligation would disappear immediately.
The company had announced a phased withdrawal.
The difficulties surrounding refined-product origin were part of the wider challenge of implementing that decision.
Contemporaneous source: Reuters — Shell CEO: No Way to Trace Russian Crude Refined Overseas, 5 May 2022.
3. S&P Global independently records the same remarks
S&P Global Commodity Insights published its own report on 5 May 2022.
Written by Robert Perkins, it examined the difficulties facing Europe’s proposed restrictions on Russian oil.
The report recorded Van Beurden’s acknowledgement that there was no worldwide system for identifying the geological origin of an individual fuel molecule after refining.
It also addressed how substantial industrial processing could affect the origin classification of petroleum products.
This is significant corroborating evidence.
Reuters and S&P Global were reporting on the same public remarks.
They are therefore not two independent confirmations of separate internal Shell decisions.
But they provide contemporaneous accounts of what the chief executive said and the context in which he said it.
S&P Global also reported that Van Beurden believed Shell was ahead of the sanctions measures then being contemplated by the European Union.
He was referring to Shell’s stated progress in reducing Russian oil purchases and the wider industry’s difficulties in implementing restrictions.
The report placed the comments within the context of Europe’s efforts to reduce imports of Russian crude and refined products.
The problem was larger than Shell.
It concerned the structure of international petroleum markets.
A government could prohibit direct imports from Russia.
A company could prohibit purchases of products identified as Russian.
But if Russian crude was refined in another country, determining whether the resulting petroleum product remained subject to an origin-based restriction required more complicated rules.
That is precisely the question later addressed by European legislation. S&P Global
4. A scientific distinction: Molecules are not shipping documents
Van Beurden’s explanation requires careful interpretation.
Crude oil contains complex mixtures of hydrocarbons.
Refining separates, converts and processes those hydrocarbons into products including petrol, diesel, aviation fuel and other petroleum derivatives.
The composition of the resulting products depends upon the crude feedstocks, the refinery’s configuration and the processing operations undertaken.
Where several crude streams are processed together, the individual components become integrated into the refinery’s output.
It is therefore difficult to identify the precise geological origin of an individual fuel molecule simply by examining the finished product.
That is the physical problem Van Beurden described.
But it is not identical to the administrative problem of tracing a shipment.
Commercial records can establish where crude oil was produced, where it was loaded, which refinery received it and what products were subsequently manufactured.
Relevant evidence may include bills of lading, certificates of origin, refinery intake records, production records, cargo documentation and contractual declarations.
Such records can support an assessment of provenance.
Their accuracy and completeness may vary.
They may become difficult to reconcile when products are blended, stored with other material or sold through multiple intermediaries.
But the absence of a universal molecular tracing system does not mean that provenance can never be established through documentation.
Physical traceability and documentary traceability are different questions.
The distinction is central to understanding subsequent European sanctions.
The EU did not need to invent a technology capable of identifying the geological origin of each individual diesel molecule.
Instead, it introduced requirements directed towards the documented origin of the crude oil used in refining.
That approach cannot eliminate every possibility of inaccurate declarations.
But it addresses the commercial and administrative problem in a different way.
5. The Indian refinery example: Why it mattered
India was a particularly relevant example in May 2022.
The country was a major energy consumer and possessed substantial refining capacity.
It also maintained commercial relationships with Russia.
Following the invasion of Ukraine, Russian crude became available to some buyers at significant discounts.
European energy companies were reducing their Russian exposures.
Indian refiners, meanwhile, had commercial incentives to purchase discounted crude.
The underlying economic logic was straightforward.
A refinery could purchase crude at a competitive price.
It could process that crude into petroleum products.
Those products could then be marketed internationally.
The products’ customs treatment might depend upon where the refining took place and the applicable rules of origin.
The location of crude extraction and the location where the finished product acquired its customs origin were not necessarily the same.
Van Beurden’s Indian refinery example therefore illustrated a genuine structural feature of international trade.
However, it is essential not to exaggerate what the example established.
It did not prove that every Indian refinery was processing Russian crude.
It did not establish that every shipment of Indian diesel contained Russian-origin hydrocarbons.
It did not identify a particular Shell purchase of Indian diesel derived from Russian crude.
Nor did it establish that India was acting unlawfully by purchasing Russian petroleum.
Those would be separate factual and legal questions requiring transaction-specific evidence.
The significance of Van Beurden’s remarks lay in the general problem he identified.
A restriction based solely on the declared origin of a finished petroleum product might fail to exclude products manufactured abroad from Russian crude. EnergyNow
6. The earlier blending controversy had exposed a related weakness
The previous instalment examined Shell’s April 2022 trading conditions.
Reuters reported on 27 April that Shell had tightened its restrictions on refined-product purchases.
The revised terms excluded products containing Russian-origin material, including blended fuels.
The change followed controversy over an earlier contractual threshold allowing certain products containing less than 50% Russian material.
The distinction between the two problems should be maintained.
The April controversy concerned blending petroleum products.
The May remarks concerned crude oil refined into new products in another country.
These are not identical processes.
Blending may combine finished petroleum products or intermediate components.
Refining involves industrial processing that can materially transform crude oil into different products.
The applicable rules of origin may therefore produce different results.
This helps explain why Shell could tighten its contractual restrictions on blended products while Van Beurden still identified a wider traceability problem.
The company could prohibit purchases of products knowingly blended with Russian-origin material.
But the problem of a third-country refinery purchasing Russian crude and exporting finished products remained.
Shell’s April trading restrictions did not themselves resolve that problem.
Nor did they constitute a comprehensive international legal framework governing the origin of refined petroleum.
They were company purchasing conditions.
A distinction between private commercial restrictions and government sanctions remained essential.
Contemporary Donovan–Shell archive: Shell Tightens Restrictions on Russian Oil Buying — 27 April 2022.
7. June 2022: Europe adopts its first major Russian oil embargo
On 3 June 2022, the European Commission announced the adoption of the EU’s sixth package of sanctions against Russia.
The measures included restrictions on Russian crude oil and refined petroleum products.
Their implementation was phased.
For seaborne Russian crude, existing contracts and certain transactions could continue during a six-month transition period.
For refined petroleum products, the corresponding period was eight months.
The package also contained specified exemptions and transitional arrangements.
The intention was to reduce the EU’s dependence on Russian oil without creating immediate and uncontrolled disruption to energy supplies.
But there was an important limitation.
The embargo primarily addressed petroleum falling within the specified Russian-origin or export categories.
It did not at that stage establish a comprehensive prohibition covering every refined product manufactured in a third country from Russian crude.
That was the type of problem Van Beurden had identified.
A prohibition on Russian-origin crude and finished petroleum products did not necessarily address all subsequent transformations outside Russia.
The distinction is important when evaluating the effectiveness of the original sanctions.
The EU had adopted substantial restrictions.
But the existence of a prohibition did not mean that all Russian crude was eliminated from the wider international market.
Russian petroleum could continue to be purchased and processed by countries not subject to the same import restrictions.
The legal consequences for subsequent exports depended upon the applicable rules.
Official source: European Commission — EU Adopts Sixth Package of Sanctions Against Russia, 3 June 2022.
8. Shell’s year-end accounts: What the company actually stopped purchasing
Shell’s subsequent 2022 financial disclosures help establish how its withdrawal developed.
By the end of the year, the company reported that it had stopped all spot purchases of Russian crude, LNG and cargoes of refined products directly exported from Russia.
It also stated that its long-term third-party purchases of Russian crude had ceased when contractually permitted, with all such purchases ending by the close of 2022.
Contracts to purchase refined products exported from Russia had also ended.
Its two pipeline-gas contracts terminated during the year.
But Shell still held two long-term LNG offtake contracts with Russian entities at the end of 2022.
The counterparty to one had stopped delivering cargoes during the third quarter.
Those contractual details have been examined in earlier Sakhalin Papers concerning the missing LNG cargoes and Shell’s surviving Russian LNG commitments.
The relevance here is narrower.
Shell’s financial statements distinguish several categories of Russian energy exposure.
They distinguish spot purchases from long-term contracts.
They distinguish crude oil from refined products.
They distinguish pipeline gas from LNG.
And they identify when particular categories of purchasing activity ceased.
What the disclosures do not provide is a complete cargo-by-cargo audit of all refined petroleum products purchased internationally by Shell after May 2022.
They therefore do not establish that no Russian-origin crude entered any refinery supplying Shell through a third-country supply chain.
Equally, they do not establish that Shell knowingly purchased such products in breach of applicable restrictions.
The absence of a comprehensive public provenance audit should not be converted into an allegation of wrongdoing.
Authenticated Shell record: Shell plc — Fourth Quarter and Full Year 2022 Results, Note 8: Withdrawal From Russian Oil and Gas Activities.
9. July 2025: The European Union moves to close the refining loophole
The most important development in the subsequent documentary record occurred on 18 July 2025.
The Council of the European Union adopted its eighteenth package of sanctions against Russia.
The package introduced a prohibition specifically targeting refined petroleum products manufactured in third countries from Russian crude.
This was a substantial change.
The EU was no longer relying exclusively upon restrictions directed towards Russian-origin finished products or direct exports from Russia.
It was addressing the origin of the crude oil used in the refining process.
The Council explained that the measure was intended to prevent Russian crude from entering the European market indirectly through third-country processing.
The legislation implementing the measure was Council Regulation (EU) 2025/1494.
It inserted Article 3ma into Regulation (EU) No 833/2014.
The operative prohibition took effect on:
21 January 2026
The new provision covers specified petroleum products obtained in third countries from crude oil originating in Russia.
The regulation uses customs classifications.
Crude oil is identified under CN code 2709 00.
The relevant petroleum products fall under CN code 2710.
The provision also addresses evidence of the original crude oil’s country of origin.
This is a significant legal development when compared with the position described by Van Beurden in May 2022.
A problem originally discussed in terms of international market limitations had become the subject of a specific legal prohibition.
Official sources: Council of the EU — Eighteenth Sanctions Package, 18 July 2025 and Council Regulation (EU) 2025/1494 — Article 3ma.
10. The new rule does not require scientists to identify individual molecules
The structure of Article 3ma is important.
It does not require a laboratory to determine the geological birthplace of every molecule in a diesel cargo.
Instead, it addresses the provenance of the crude oil used by the refinery.
Under the regulation, importers generally must provide evidence of the country of origin of the crude used in the third-country refining process.
The rule also contains qualifications.
Specified partner countries are treated differently.
There are provisions concerning products imported from countries that were net exporters of crude in the preceding calendar year.
Those provisions include presumptions that can be challenged where authorities have reasonable grounds to believe Russian crude was used.
The result is not an absolute requirement for identical documentation in every case.
Nor does the legislation guarantee that every declaration will be correct.
It establishes a legal framework in which the underlying crude-oil source can become decisive even when the finished product was manufactured elsewhere.
This represents a different approach to the problem identified in 2022.
Van Beurden was discussing the absence of a universal system for tracing individual molecules.
The legislation addresses documented supply-chain origin.
These approaches are not contradictory.
One concerns physical traceability.
The other concerns legal and commercial evidence.
The distinction should be understood before claiming either that the problem is impossible to solve or that the new regulation has eliminated every possible loophole. EUR-Lex
11. June 2026: The European Commission issues further guidance
The regulatory development did not end with the legislation.
On 15 June 2026, the European Commission published updated guidance concerning the import ban on refined petroleum products obtained from Russian crude.
The guidance addresses Article 3ma and its implementation.
Its publication demonstrates that applying the prohibition required further explanation.
The central difficulty is not merely identifying a country’s name on an import declaration.
It involves determining whether the crude oil used in a refinery originated in Russia.
That may require examination of commercial and production records.
The applicable evidence requirements depend upon the product, the importing jurisdiction and the exceptions contained in the regulation.
The existence of detailed implementation guidance is therefore significant.
It illustrates that the practical questions raised in 2022 remained important after the introduction of the new legal restrictions.
The policy had changed.
The underlying complexity of the petroleum supply chain had not disappeared.
Official source: European Commission — Import Ban on Refined Products Obtained From Russian Crude Oil, Updated 15 June 2026.
12. July 2026: Further action against third-country refining
A further development followed on 23 July 2026.
The Council of the European Union adopted its twenty-first sanctions package against Russia.
The measures included additional restrictions concerning energy, banking, financial services and companies alleged to be assisting Russia’s ability to sustain its war.
Of particular relevance to the present investigation was a measure concerning oil refining.
The Council established a mechanism allowing transactions to be prohibited with designated refineries in Russia and third countries involved in processing Russian crude or petroleum products.
The package included a transaction ban, subject to a delayed commencement, concerning a refinery in Kulevi, Georgia.
This was a different legal mechanism from the general import prohibition established under Article 3ma.
But it addressed another aspect of the same underlying problem.
The EU was seeking to restrict not only direct Russian petroleum imports but also commercial structures through which Russian oil could continue reaching markets.
The measures show how the sanctions framework developed after Van Beurden’s May 2022 remarks.
The European response increasingly addressed third-country refining, trading and associated services.
However, this development should not be presented as evidence that Shell was involved in any transaction with the Georgian refinery.
No such connection is established by the sources examined.
Nor does the existence of the sanctions establish that Shell had previously violated the law.
The relevance lies in the evolution of the regulatory framework.
Official source: Council of the European Union — Twenty-First Sanctions Package, 23 July 2026.
13. The historical significance: Shell identified a weakness that governments later addressed
The sequence is unusually clear.
In March 2022, Shell publicly committed to withdrawing from Russian hydrocarbons.
In April, its trading conditions attracted criticism because certain blended products remained eligible for purchase.
The company tightened those conditions.
In May, its chief executive explained a more fundamental difficulty involving crude refined outside Russia.
In June, the EU adopted major restrictions on Russian oil imports.
In July 2025, the Council adopted additional legislation covering refined products manufactured in third countries from Russian crude.
The new prohibition took effect in January 2026.
Further implementation guidance followed in June.
Additional sanctions concerning refining operations were adopted in July.
These developments demonstrate that the original problem had continuing significance.
But the historical conclusion must remain precise.
The 2025 legislation does not prove that Shell had knowingly exploited the problem in 2022.
Nor does it establish that Van Beurden was advocating circumvention of sanctions.
His public remarks identified a limitation in the international petroleum supply system and the origin rules then operating.
The subsequent legislation addressed that limitation through new legal requirements.
The authenticated record therefore supports a clear conclusion: an important weakness in the original restrictions was publicly identified by Shell’s chief executive in May 2022, and the EU later adopted measures specifically directed towards that category of third-country refining.
That is a substantial documentary finding without requiring an allegation of unlawful conduct.
DOCUMENTARY FINDINGS
Established facts
Shell apologised on 8 March 2022 for purchasing a Russian crude cargo and announced a phased withdrawal from Russian hydrocarbons.
On 27 April, Reuters reported that Shell had tightened its purchasing conditions to exclude refined products containing Russian-origin material, including blended fuels.
Shell’s first-quarter 2022 results, published on 5 May, recorded adjusted earnings of $9.130 billion and approximately $3.9 billion in post-tax charges associated with withdrawing from Russia.
On the same day, Reuters and S&P Global reported Ben van Beurden’s remarks concerning the difficulty of tracing Russian crude after it had been refined abroad.
His explanation included the example of Russian crude processed into diesel at an Indian refinery.
The EU adopted its sixth sanctions package on 3 June 2022, introducing phased restrictions on Russian oil imports.
Shell’s subsequent 2022 financial disclosures recorded the cessation of several categories of Russian crude and refined-product purchases.
On 18 July 2025, the EU adopted its eighteenth sanctions package, including restrictions directed towards petroleum products refined in third countries from Russian crude.
Article 3ma of Regulation (EU) No 833/2014, introduced through Regulation (EU) 2025/1494, took effect on 21 January 2026.
The European Commission published further guidance on 15 June 2026.
The EU’s twenty-first sanctions package, adopted on 23 July 2026, introduced additional measures concerning refineries and other entities associated with Russian petroleum.
Matters requiring qualification
Van Beurden’s statement concerned the lack of a comprehensive global system for tracing individual fuel molecules.
It did not establish that commercial records could never identify the origin of refinery feedstocks.
The Indian diesel example illustrated how refining could affect the classification of petroleum products.
It did not identify a particular Shell transaction involving Russian crude refined in India.
The EU’s 2026 prohibition contains qualifications and exceptions.
It should not be characterised as an unconditional worldwide prohibition on every petroleum product derived from Russian crude.
The EU measure concerns imports into the Union and related activities within its legal scope.
It does not automatically determine the legal position of transactions occurring entirely outside EU jurisdiction.
Legal findings
The authenticated EU legislation establishes a prohibition directed towards specified petroleum products obtained in third countries from Russian-origin crude.
The prohibition took effect after the events discussed in May 2022.
It must not be applied retrospectively to establish that Shell’s earlier activities were unlawful.
No court judgment specifically finding Shell liable for unlawful imports of Russian-derived third-country refined products has been identified in the materials examined for this instalment.
The EU’s subsequent sanctions against particular refining operations are not evidence of misconduct by Shell.
Not established
The available evidence does not establish that Shell deliberately purchased Indian-refined diesel containing Russian crude after its May 2022 statements.
It does not establish that Shell falsified origin documents.
It does not establish that Shell knowingly breached applicable sanctions through the acquisition of third-country refined products.
It does not establish the proportion of Russian-origin crude, if any, contained in every cargo acquired through Shell’s international refined-product supply chain.
Nor does it establish that the EU’s later documentary verification requirements can guarantee the absence of Russian-origin material from every relevant import.
EDITORIAL COMMENTARY
The difference between a corporate promise and a provable result
The most revealing feature of this episode is not the chemistry.
It is the difference between what a company can promise and what it can demonstrate.
Shell announced that it intended to withdraw from Russian hydrocarbons.
That was a corporate policy decision.
Implementing the decision required the company to change contracts, purchasing procedures, supply arrangements and trading relationships.
Shell’s subsequent statements demonstrate that those changes took time.
But another question remained.
How could the company establish that petroleum products purchased from third countries did not contain material originating in Russia?
The problem was not unique to Shell.
International commodity markets were built around physical supply, commercial specifications, price and delivery obligations.
Their systems were not necessarily designed to trace every component of a refined fuel back to the country where the original crude oil had been extracted.
Van Beurden’s May 2022 comments acknowledged that limitation.
The issue raises a broader question about corporate accountability.
A company can adopt a purchasing prohibition.
It can require suppliers to make contractual declarations.
It can examine available documentation.
It can stop purchasing from suppliers that cannot provide sufficient assurances.
But these actions do not automatically create perfect physical traceability.
Nor do they establish that a company has deliberately acted improperly whenever documentation proves incomplete.
The distinction matters.
The role of government
Shell’s March 2022 announcement also acknowledged that withdrawal from Russian energy would require coordination with governments.
That was a realistic assessment.
Energy supplies were international.
Refineries depended upon feedstocks from several countries.
Petroleum products passed through complicated trading networks.
The necessary changes involved both private commercial decisions and public regulation.
The subsequent EU legislation illustrates the difference between those responsibilities.
In 2022, Shell could tighten its own purchasing conditions.
It could not unilaterally rewrite customs law for every country or impose a universal traceability system upon the entire petroleum industry.
Governments possessed powers that Shell did not.
The EU eventually used those powers to prohibit specified imports of third-country refined products derived from Russian crude.
That intervention changed the legal framework.
It did not eliminate every practical difficulty associated with verifying origin.
But it made the underlying source of the crude a more explicit compliance requirement.
A warning against rewriting history
There is a temptation to interpret every subsequent sanctions development as confirmation that earlier corporate transactions were unlawful or deliberately deceptive.
That would be a mistake.
The legal position in May 2022 was different from the legal position in January 2026.
Governments introduced additional restrictions because the earlier framework had limitations.
The fact that a later rule addresses a particular commercial practice does not automatically establish that the practice was illegal before the new rule took effect.
Similarly, the existence of a loophole does not prove that every company trading in the relevant market intentionally exploited it.
Documentary accuracy requires these distinctions.
The purpose of this investigation is to identify what Shell said and what subsequent governments did.
It is not to manufacture an allegation unsupported by the records.
The importance of Shell’s own words
The most compelling evidence in this instalment comes from Shell itself.
Its March announcement established the withdrawal commitment.
Its April trading changes demonstrated the process of implementation.
Its May financial results established the wider commercial circumstances.
And its chief executive publicly identified a fundamental problem concerning the origin of petroleum refined abroad.
The later EU legislation provides an important historical comparison.
It shows that the issue was sufficiently significant to become the subject of binding restrictions.
But the company should be assessed against the law applicable at the time of its actions.
This is not a matter of excusing conduct.
It is a matter of maintaining the integrity of the documentary record.
The central finding is that Shell’s chief executive publicly identified a limitation in the international petroleum supply system in May 2022, and subsequent European legislation sought to address that limitation through restrictions and origin-documentation requirements.
The historical significance is considerable.
It also points towards a wider question.
If European companies were withdrawing from Russia, how did Russia’s commercial relationships with countries outside Europe develop?
India provides a particularly interesting example.
And in the same month that Van Beurden was explaining the problem of Indian-refined diesel, Reuters reported that Shell was discussing something else with Indian energy companies.
The possible sale of its interest in Sakhalin II.
PRINCIPAL SOURCES
1. Shell plc — Shell Announces Intent to Withdraw From Russian Oil and Gas, 8 March 2022
The authenticated corporate announcement establishing Shell’s policy of phased withdrawal from Russian hydrocarbons.
Read Shell’s original announcement
2. RoyalDutchShellPlc.com — Shell Tightens Restrictions on Russian Oil Buying, 27 April 2022
The contemporary Donovan–Shell archive preserves Reuters’ reporting on the change to Shell’s purchasing conditions concerning blended products.
Read the original archive publication
3. Shell plc — First Quarter 2022 Unaudited Results, 5 May 2022
The original financial announcement provides authenticated figures for adjusted earnings, cash flow and Russia-related charges.
Read Shell’s original financial results
4. Reuters — Shell CEO: No Way to Trace Russian Crude Refined Overseas, 5 May 2022
Contemporaneous reporting of Van Beurden’s comments concerning crude refined in third countries, including the Indian diesel example.
Read the Reuters report reproduced by EnergyNow
5. S&P Global Commodity Insights — Shell Flags Industry Hurdles to Blocking All Russian Imports Into EU, 5 May 2022
Robert Perkins’ contemporary report provides additional context concerning international refining, blending, origin classifications and the proposed EU restrictions.
Read the S&P Global investigation
6. Shell plc — Fourth Quarter and Full Year 2022 Results, Note 8
Shell’s authenticated disclosure distinguishes the cessation of spot crude purchases, long-term crude contracts, refined-product purchases and other Russian hydrocarbon arrangements.
Read Shell’s year-end disclosure
7. European Commission — Sixth Sanctions Package Against Russia, 3 June 2022
The official announcement establishing the original phased restrictions on Russian seaborne crude and refined petroleum products.
Read the European Commission announcement
8. Council of the European Union — Eighteenth Sanctions Package, 18 July 2025
The official announcement confirming the introduction of restrictions on refined petroleum products manufactured in third countries from Russian crude.
9. Council Regulation (EU) 2025/1494 — Article 3ma
The primary legislative instrument establishing the prohibition effective from 21 January 2026, including its origin-documentation requirements and qualifications.
Read the official EU regulation
10. European Commission — Guidance on Refined Products Obtained From Russian Crude, 15 June 2026
Official guidance concerning implementation of Article 3ma.
Read the European Commission guidance page
11. Council of the European Union — Twenty-First Sanctions Package, 23 July 2026
Official documentation of additional sanctions affecting petroleum refining and related commercial activities.
12. RoyalDutchShellPlc.com — Shell Profits Jump 43% to £7.2 Billion Amid Calls for Windfall Tax, 5 May 2022
The Donovan–Shell archive’s contemporaneous account of Shell’s financial performance during the period covered by this investigation.
Read the original archive publication
DOCUMENTARY DISCLAIMER
This instalment is based upon authenticated Shell corporate announcements and financial disclosures, contemporaneous Reuters and S&P Global reporting, official European Union legislation and regulatory guidance, and contemporary material preserved by RoyalDutchShellPlc.com.
Ben van Beurden’s statements of 5 May 2022 are attributed to him through contemporaneous independent reporting. They are distinguished from formal corporate commitments made in Shell’s written announcements.
The absence of a universal system for tracing individual petroleum molecules is distinguished from the possibility of establishing refinery-feedstock provenance through commercial documentation.
The example of Indian-refined diesel is reported as an illustration used by Shell’s chief executive. It is not presented as evidence of a specific unlawful Shell transaction.
The EU legislation introduced in 2025 and taking effect in January 2026 is distinguished from the sanctions framework applicable in May 2022.
No retrospective allegation of illegality is made.
The exemptions, presumptions and evidential requirements contained in Article 3ma are acknowledged.
The article does not allege that Shell knowingly purchased third-country refined products derived from Russian crude in breach of sanctions.
It does not allege that Shell falsified customs documentation or deliberately concealed the origin of particular petroleum shipments.
No court judgment specifically establishing such misconduct by Shell has been identified in the records examined.
The discussion of international refinery operations concerns general supply-chain characteristics, not allegations against particular Indian or other third-country refiners.
Editorial commentary is identified separately from established documentary findings.
Relevant 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-2007-106 — The Sakhalin Papers XCVI: The India Option — Shell’s Attempted Sakhalin II Sale and the Buyers Who Never Took Control
On 5 May 2022, Shell’s chief executive explained how Russian crude could be refined into products classified as originating in India.
Three weeks later, Reuters revealed another development involving Shell, Russia and India.
On 26 May 2022, journalists Ron Bousso and Nidhi Verma reported that Shell was in discussions with a consortium of Indian energy companies concerning its 27.5% interest in Sakhalin II.
The companies identified in the report included ONGC Videsh and GAIL.
The discussions reportedly extended beyond the equity investment.
They also concerned long-term LNG and crude-oil supply arrangements associated with Sakhalin II.
Shell declined to comment.
The Indian companies did not provide substantive confirmation of a completed transaction.
Reuters emphasised that any sale would require Russian approval.
At the time, the proposed negotiations appeared to offer Shell a possible commercial route out of its flagship Russian investment.
But events were moving rapidly.
On 30 June 2022, President Vladimir Putin signed Decree No. 416.
The decree transferred Sakhalin II’s operating rights and obligations into a newly created Russian company.
The original ownership arrangements were fundamentally altered.
Shell subsequently declined to participate in the replacement company.
The Indian consortium talks did not produce a completed sale of Shell’s original Sakhalin stake.
The questions are important.
What exactly was Shell attempting to sell to the Indian companies?
Was the proposed transaction limited to equity, or were long-term LNG and crude supply arrangements also under discussion?
How would a conventional commercial sale have affected Shell’s financial position?
Did the subsequent Russian restructuring make that possibility impossible?
And what can be established about the negotiations from contemporaneous sources, rather than later speculation?
The next instalment will reconstruct the Indian discussions, identify what was publicly known about the proposed transaction and examine how Russia’s intervention changed Shell’s options.
The investigation will distinguish reported negotiations from a binding sale agreement and a proposed purchase from a completed transfer.
Shell was attempting to leave Russia. Indian companies were reportedly considering acquiring its Sakhalin interest. But Moscow would ultimately determine the terms under which the project’s ownership could change.
The story continues.
The Sakhalin Papers continue.
Documentary starting point: Reuters — Exclusive: Shell in Talks With Indian Consortium to Sell Russian LNG Plant Stake, 26 May 2022, preserved by RoyalDutchShellPlc.com.
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