Shell’s “bottom buying” of Russian oil has reversed course.
On Tuesday, Shell issued a statement on its official website saying that it would stop all spot purchases of Russian crude oil and would not renew long-term contracts, but existing purchase contracts will continue to be implemented.
Under new government guidance, Shell will phase out all oil and gas projects in Russia, including crude oil, petroleum products, natural gas and liquefied natural gas, and will also close its gas stations, aviation fuel and lubricants operations in Russia.
Shell CEO Ben van Beurden said in an official statement: We clearly realize that our decision to buy Rosneft last week was incorrect. We are changing our crude oil supply chain to reduce crude oil coming from Russia. We will complete this work as quickly as possible, it may take several weeks to complete.
So far, governments have not banned Russian oil and gas exports because they fear such a move would cause prices to spike. Although the United States, Britain and the European Union have imposed tough sanctions on Russia and its financial system, Russia’s energy exports have been excluded from the sanctions, with most Western refiners, banks and shipowners avoiding the country’s huge commodities market.
Shell bought 100,000 metric tons of Russia’s flagship Urals crude oil on Friday, according to a Bloomberg report. The company paid $28.50 a barrel less than international benchmark Brent crude, the largest discount on record.
Regarding the purchase of Russian oil, Shell previously stated in a statement that without uninterrupted supply of crude oil to refineries, the energy industry will not be able to ensure that it can continue to provide daily necessities for the European people in the coming weeks. The company has been in vigorous discussions with the government and will continue to follow their guidance on energy supply security,” but it is also “very clear that we must deal with this dilemma with extreme caution”: We will continue to choose Russia wherever possible alternatives to oil, but given Russia’s importance to global oil supplies, this is unlikely to happen overnight.
</p
