Shell to stop buying Russian oil and natural gas amid Ukraine invasion

Energy giant says it will take weeks to remove all Russian fossil fuels from supply chains and ‘much longer’ to transition to other supplies

Oil giant Shell has been criticised by Ukraine’s foreign minister for making a purchase from Russia this week despite the invasion (Anna Gowthorpe/PA) (PA Wire)

Energy giant Shell says it will stop buying Russian oil, natural gas and shut service stations in the country, as pressure mounts on western companies to sever all ties with Moscow.

Shell said in a statement on Tuesday that it would withdraw from all Russian hydrocarbons, including crude oil, petroleum products and gas, “in a phased manner.”

The decision comes just days after Ukraine’s foreign minister criticised Shell for continuing to buy Russian oil, lashing out at the company for doing business with President Vladimir Putin’s government.

“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,” Shell chief executive Ben van Beurden said.

The Shell boss said he was “sorry” for buying a shipment of Russian oil last week even as dozens of major international companies announced they would abandon the country over its war in Ukraine.

The business bought the oil last week at knock-down prices, as sanctions began to bite on the Russian economy.

Disruption to supplies and concerns about further sanctions have pushed petrol prices to record highs (Yui Mok/PA) (PA Wire)

“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 chief executive Ben van Beurden.

Profits from the remaining Russian gas that Shell will process will be sent to a fund and the business will work with humanitarian organisations to figure out how best to spend the money.

While Russian oil and gas have not been directly sanctioned, imports of both commodities have been disrupted by western governments’ responses to the invasion of Ukraine. Banks are refusing to grant finance to buyers of Russian crude and many refiners outside the country have stopped accepting delivery, fearing that sanctions may soon be imposed.

Any further block on Russian fuel imports is expected to send economic shockwaves throughout Europe, further reducing living standards and potentially pushing the EU into recession.

Russia supplies around 40 per cent of the EU’s gas and is the world’s second largest oil producer. Moscow warned on Monday that any import ban would have “catastrophic consequences” for the continent, more than doubling the price of oil to $300.

The countries which import the most Russian oil (Statista/The Independent)

Mr van Beurden said Shell’s decision had been guided by talks with governments about the “need to disentangle society from Russian energy flows, while maintaining energy supplies”.

He added: “Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this.”

Any proceeds from the “limited” amount of Russian oil Shell will continue to process are to be placed into a 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,” Mr van Beurden said.

Last week Shell said it would end its involvement with the Nord Stream 2 pipeline which was intended to bring Russian gas into Europe. It also said at the time it would exit its partnerships with Gazprom.

On Tuesday the company said it might take weeks to completely remove of Russian crude oil from its supply chains, while transitioning to other energy supplies will take much longer.

It said that withdrawing from Russian petroleum, piped gas and LNG is a “complex challenge” which will need “concerted action by governments, energy suppliers and customers”.

It comes as Russia’s unprovoked invasion of Ukraine continues, with shelling seen in many civilian areas of the country.