British multinational oil and gas company, Shell PLC has disclosed that it will no longer patronise Russia for its hydrocarbons, including oil and natural gas.
This is coming after Russia launched an attack on Ukraine that has lasted for over a week. Shell’s exit from the Russian oil market will make it one of the first major Western Oil Companies to dump Russia entirely since the attack on Ukraine.
Although the company disclosed last week that it would pull out of its Russian operations, including the Sakhalin 2 LNG plant in which it holds a 27.5% stake and which is operated by Gazprom, the company was said to have bought oil from Russia in the same week.
Disclosing that Shell PLC will no longer continue with Russia, Chief Executive Officer Ben van Beurden apologised for making the last purchase: “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil … was not the right one and we are sorry.”
Russia has been served a number of international sanctions since the country invaded Ukraine, however, Russia’s crude oil and gas has been exempt from Western sanctions so far.
Despite no sanctions on oil and gas in Russia, reports reveal that oil soared above $139 a barrel on Monday, 7th March – a recorded highest since July 2008. U.S. President Joe Biden has also sanctioned Russian oil tankers with the British and Canadian government banning Russian vessels from landing at their ports in protest against the invasion.
In another report, French multinational company, TotalEnergies disclosed that the company had completely stopped buying oil from Russia, although one of its landlocked refineries in Germany continued to receive Russian crude by pipeline.
While Shell has revealed that it would change its crude oil supply chain to remove volumes from Russia ‘as quickly as possible’ and also shut its service stations in Russia, as well as its aviation fuels and lubricants operations in the country, the resultant effect of this may be a problem in the long run.
Investors King recalls that Russian ruler Vladimir Putin has threatened any country or body that stands against its military action with sanctions and isolation. Some experts project that the Russian government may consider tagging these companies as ‘filed for bankruptcy’ and thereby nationalising their assets.
