Fuel giant Shell has promised that it will no longer purchase oil from Russia, after it came under fire for buying a cut-price shipment of Russian crude oil last week.
At the time, Shell defended its decision by maintaining that it had “no alternative” but to buy Russian crude in order to guarantee continued market supply. But after facing widespread criticism over the purchase, including from Ukrainian foreign minister Dmytro Kuleba, Shell CEO Ben van Beurden said that it had been wrong to go through with the transaction.
Van Beurden said: “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil... was not the right one and we are sorry.”
Shell has also promised to go further by closing all its service stations in Russia - which total around 500 - and suspending all ongoing work in the country, which includes aviation fuel and lubricant operations. Any profits generated from the Russian oil shipment will be redirected to aid funds for people affected by the Ukraine conflict.
However, moving all of Shell’s remaining operations from the Russian oil and gas market is expected to be a time-consuming exercise, with van Beurden conceding that exiting the Russian sphere completely will be a “complex challenge”.
He said: “Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer.”
Around eight per cent of Shell’s overall working supply is comprised of Russian oil, and it is not clear at this stage how the firm is likely to compensate for that loss.
Van Beurden continued: “These societal challenges highlight the dilemma between putting pressure on the Russian government over its atrocities in Ukraine and ensuring stable, secure energy supplies across Europe.
“But ultimately, it is for governments to decide on the incredibly difficult trade-offs that must be made during the war in Ukraine.”
The Shell boss said that the company would continue to work closely with European governments to manage any impact on energy supplies.
Shell has separately promised to end any joint ventures with Russian energy firm Gazprom, which will see its stakes in two Siberian oil field projects and its cut of a major liquefied natural gas plant offloaded.
Shell is also set to withdraw from any involvement in the Nord Stream 2 gas pipeline running between Russia and Germany, a project which had already been put on pause by the German government following the Russian invasion of Ukraine.
Elsewhere, the US has been considering an embargo on Russian oil and gas following the Kremlin’s attack on Ukraine, but other Western allies have voiced opposition to an immediate ban after Russia threatened to respond in kind by turning off gas supplies to Europe.
The EU imports 40 per cent of its gas supplies and 30 per cent of its oil from Russia, meaning that an embargo could have a significant impact on energy supply and push up prices even further.
The UK imports under five per cent of its gas from Russia, but although supply would not be as severe an issue on British shores, rising fuel prices would have an effect.
The Kremlin has said that any embargo on Russian oil would be “catastrophic” for the global market, with prices likely to double to around $300 per barrel.
Photo by John Cameron on Unsplash
