Credit: Reuters File Photo
Shell, Europe’s largest oil company, said Saturday that it would probably continue to buy Russian crude oil to feed into its refineries and supply customers with gasoline and diesel but would donate any profits to a fund dedicated to “the people of Ukraine."
Shell had said last Monday that it was pulling out of operations in Russia. It issued a statement on its oil purchases Saturday, a day after an article in the Financial Times revealed that the company had bought a cargo of Russian crude oil.
Shell said in the statement that it understood that governments wanted energy flows to continue from Russia for the time being. The company described the purchase of the oil as “a difficult decision” taken to “avoid disruptions to market supply.”
It went on, “Without an uninterrupted supply of crude oil to refineries, the energy industry cannot assure continued provision of essential products to people across Europe in the weeks ahead.”
Russia is one of the world’s largest oil exporters, and many refineries, especially in Europe, are probably configured for processing some Russian crude. “Cargoes from alternative sources would not have arrived in time” to avoid interruptions in supp...
The imbroglio shows the difficulty that oil companies and governments are having in calibrating their response to the invasion of Ukraine. Governments have been trying to impose sanctions on the Russian economy without disrupting flows of oil and and natural gas. The idea is to punish Russia without inflicting pain on consumers in Europe, which is highly dependent on both Russian natural gas and oil, and the United States. Achieving these goals will probably prove difficult. Already, most buyers are shunning Russian oil, which is selling at a substantial discount.
Shell announced last Monday that it would pull out of joint ventures with Gazprom, the Russian natural gas monopoly, including a liquefied natural gas facility on Sakhalin Island in Russia’s Far East. Shell also said that it would end its involvement with the Nordstream 2 natural gas pipeline from Russia to Germany, a project that has been completed but was blocked.
Those moves, which will take time to be fully carried out, may not be sufficient to satisfy public opinion. Shell said that it would buy alternatives to Russian crude when possible, but completely dropping Russian oil could not happen overnight.
It ended its statement Saturday by saying it would work with aid groups and humanitarian organizations to determine where best to put the money from its Russian oil fund “to alleviate the terrible consequences that this war is having on the people of Ukraine.”
