Shell has said it will withdraw fully from Russia and immediately stop new purchases of Russian oil, days after the energy major was criticised for profiting from a cargo of cheap Russian crude.
The London-listed energy group on Tuesday said it would cease spot purchases of Russian oil and withdraw from “all Russian hydrocarbons, crude oil, petroleum products, gas and liquefied natural gas in a phased manner”.
The group also said it would shut all “service stations, aviation fuels and lubricants operations” in Russia.
Shell announced plans last week to withdraw from all three of its joint ventures with Kremlin-backed Gazprom, but stopped short of a commitment to cease all Russian business.
The latest move follows public criticism of the UK-listed energy major’s earlier decision to continue to buy Russian crude.
While many oil companies and refiners are still lifting Russian products already purchased under long-term contracts, Shell was unusual in that it made a new purchase last week when many traders were already avoiding new Russian cargoes.
“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,” Ben van Beurden, Shell chief executive, said on Tuesday.
The decision continues a rapid corporate retreat from Russia as western companies reassess their relations with Moscow and in some cases tear up business relationships that were decades in the making.
Shell said it would commit to a dedicated fund any profits from the limited Russian oil that it would still need to process as it wound down operations.
“We will work with aid partners and humanitarian agencies . . . 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,” van Beurden said.
A Russian exit for its petroleum products, pipeline gas and liquefied natural gas businesses would require a “phased withdrawal”, Shell 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.”
For example, Shell has an offtake agreement for 1mn tonnes of LNG a year from Gazprom’s huge Sakhalin-2 project in Russia’s far east. The UK-based company said last week that it would divest its 27.5 per cent equity stake in the project, but before Tuesday’s announcement was expected to retain the offtake contract, which was due to run until 2028.
