The Shell logo on a pump in London, on Jan. 30, 2014.Suzanne Plunkett/Reuters
Energy giant Shell SHEL-N said Tuesday that it will stop buying Russian oil and natural gas and shut down its service stations, aviation fuels and other operations in the country amid international pressure for companies to sever ties over the invasion of Ukraine.
The company said in a statement that it would withdraw from all Russian hydrocarbons, including crude oil, petroleum products, natural gas and liquefied natural gas, “in a phased manner.”
The decision comes as surging oil prices have been rattling global markets and days after Ukraine’s foreign minister criticized Shell for continuing to buy Russian oil, lashing out at the company for continuing to do 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,” CEO Ben van Beurden said.
He said profits from the company’s “limited, remaining amounts of Russian oil” would go to a fund for relief efforts for Ukrainians.
Ukrainian Foreign Minister Dmytro Kuleba said he had been told Shell “discreetly” bought the oil Friday and appealed to the public to pressure the company and other international firms to halt such purchases.
“One question to Shell: doesn’t Russian oil smell (like) Ukrainian blood for you?” Kuleba said on Twitter. “I call on all conscious people around the globe to demand multinational companies to cut all business ties with Russia.”
Last week, Shell said it was “shocked by the loss of life in Ukraine” and would end its joint ventures with Gazprom, the massive oil and gas company controlled by the Russian government.
While the U.S., Britain and the European Union have imposed tough economic sanctions on Russia, they have stopped short of banning oil and gas imports from Russia because of concerns about the impact that would have on global energy supplies. Russia is the world’s second-biggest oil producer, accounting for more than 12 per cent of global production, according to the International Energy Agency.
Ukraine and its supporters have called on countries around the world to stop buying Russian oil to restrict funding for Putin’s military exploits. But that is certain to affect consumers.
A month ago, oil was selling for about $90 a barrel. Now, prices are surging past $120 a barrel as buyers shun Russian crude, with many refiners fearing that sanctions could be imposed in the future. They worry about being left with oil they couldn’t resell as gasoline if sanctions were imposed in the near future.
“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 said.
He said Shell would work with governments “to help manage the potential impacts on the security of energy supplies, particularly in Europe.”
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.