Topline
Shell has pledged to stop buying Russian oil and gas and will immediately stop buying Russian crude oil, the company announced on Tuesday, as the firm’s boss apologized for purchasing discounted crude oil from Russia last week amid the ongoing invasion of Ukraine.
Key Facts
The company said it will “withdraw” from its involvement in all Russian hydrocarbons, including crude oil, gas and liquefied natural gas and petroleum products.
The firm said it will immediately stop purchasing Russian crude oil and stop its lubricant and aviation fuel operations in the country.
Shell also said it will close its service stations in Russia.
The move comes days after the company doubled down on its decision to purchase discounted Russian crude last week, which chief executive Ben van Beurden said was “not the right one” and apologized for.
Profits from the remaining Russian crude will be processed to a fund dedicated to helping those affected by the war in Ukraine, van Beurden said.
Crucial Quote
Shell initially said it had “no alternative” but to purchase Russian crude last week in order to keep European fuel supplies stable. “Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this,” van Beurden said Tuesday, adding the company will roll back its Russian operations unless instructed to do otherwise by governments. “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,” van Beurden explained. “But ultimately, it is for governments to decide on the incredibly difficult trade-offs that must be made during the war in Ukraine.”
What To Watch For
Oil sanctions. The Russian energy sector has largely escaped the tough sanctions imposed on Russia by Western countries. Many European countries rely heavily on Russian fuel exports—it is the world’s leading exporter of natural gas and second-leading exporter of crude oil—and are vulnerable to any supply disruptions. Sanctions on Russian energy have usually been unthinkable as a result of this dependency and existing sanctions have already sent fuel prices skyrocketing. Ukraine has urged leaders to establish a “full embargo” on Russian oil amid Putin’s assault.
Big Number
$4.17. That’s the average cost of regular gas per gallon in the U.S. on Tuesday, according to AAA data. The figure exceeds the all-time record of $4.114 per gallon in July 2008.
Further Reading
Will the west place an embargo on Russian oil and gas supplies? (FT)
