Shell won’t buy any more Russian oil and gas
Last week, Shell (RDSA) bought 100,000 tons of oil at a high discount from Russia. However, on March 8, the company announced it officially stopped all purchases of Russian crude oil. This decision is said to be aligned with new government guidance. Shell will also immediately begin to shut down its service stations, aviation fuels and lubricants operations in Russia in “the safest way” possible, and begin a phased withdrawal from Russian petroleum products, pipeline gas and liquified natural gas.
Unless told to do otherwise by governments, Shell said it would immediately halt purchases of Russian crude oil on the spot market and not renew contracts. It would also reconfigure its supply chain to cut out Russian crude altogether. Shell said that they 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 the company’s refineries.
Shell CEO Ben Van Beurden said in a statement that their 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. He also apologized for Shell’s decision last week to buy a cargo of Russian crude for refining into gas and diesel. At the same time, Shell has said it will commit profits from the remaining barrels of Russian oil it processes to a fund dedicated to alleviating the consequences of the war for the people of Ukraine.
Current oil price
Russia’s vast energy exports have so far been carved out of the unprecedented sanctions imposed by the West in response to President Vladimir Putin’s decision to order his troops to invade Ukraine. But Russian crude oil is already being shunned by some traders and oil companies, and US officials are discussing banning imports. Russia’s benchmark Urals crude is trading at a discount of $25 a barrel, compared to just a couple of dollars before the invasion. Moscow warned late Monday that oil prices could soar to $300 a barrel if the West banned its oil, adding that it could cut supplies of natural gas to Germany in retaliation for Berlin’s decision to prevent Russia’s Nord Stream 2 pipeline coming on stream.
European countries were facing a dilemma between putting pressure on the Russian government over its actions in Ukraine and ensuring stable, secure energy supplies. Shell announced that the company will continue to work with the government to help manage the potential impacts on the security of energy supplies, particularly in Europe.
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The US and UK officially banned the import of Russian oil and gas
