Shell withdraws from 'all Russia hydrocarbons'
Shell today announced its intent to withdraw its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and LNG in a phased manner, aligned with new government guidance.
As an immediate first step, the company will stop all spot purchases of Russian crude oil, and shut its service stations, aviation fuels and lubricants operations in Russia.
“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry," said Shell Chief Executive Officer, Ben van Beurden.
"As we have already said, we will commit profits from the limited, remaining amounts of Russian oil we will process to a dedicated fund. We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine."
He said its actions to date have been guided by continuous discussions with governments about the need to disentangle society from Russian energy flows, while maintaining energy supplies. Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences.
Following government statements this week, Shell has outlined the following measures:
- Immediately to stop buying Russian crude oil on the spot market and not renew term contracts
- At the same time, in close consultation with governments, it is changing its crude oil supply chain to remove Russian volumes. "We will do this as fast as possible, but the physical location and availability of alternatives mean this could take weeks to complete and will lead to reduced throughput at some of our refineries," it said.
- Closing service stations, aviation fuels and lubricants operations in Russia. It will consider very carefully the safest way to do this, but the process will start immediately.
- Start phased withdrawal from Russian petroleum products, pipeline gas and LNG. This is "a complex challenge". Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer.
“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,” said van Beurden. “But ultimately, it is for governments to decide on the incredibly difficult trade-offs that must be made during the war in Ukraine. We will continue to work with them to help manage the potential impacts on the security of energy supplies, particularly in Europe."
Last week Shell followed bp in severing ties with Russian interests after it announced its intention to exit its joint ventures with Gazprom and related entities (click here). These included its 27.5% stake in the Sakhalin-II liquefied natural gas facility, 50% stake in the Salym Petroleum Development and Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.