Shell says it intends to leave Russian oil and gas
Shell said March 8 it intended to withdraw its involvement in all Russian hydrocarbons, but will wind down LNG trading in a "phased manner".
CEO Ben van Beurden said the LNG phase-out is a complex challenge and would require "concerted action by governments, energy suppliers and customers." He argued that the transition to other energy suppliers aside from Russia would take "much longer".
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The UK-headquartered major will also phase out Russian activities relating to piped gas, crude oil and petroleum products. It will begin by stopping all Russian crude oil spot purchases and refusing to renew term contracts, and will also enter close government consultations to remove Russian volumes from its crude oil supply chains.
Shell drew criticism for buying Russian crude on March 4 in light of the war in Ukraine. Van Beurden said he wanted to clearly "set out" its position, and argued Shell's actions to date were guided by the need to "disentangle" society from Russian energy flows while maintaining energy supplies.
"Threats today to stop pipeline flows to Europe further illustrate the difficult choices and potential consequences we face as we try to do this."
Shell will also begin the process of closing its Russian service stations, as well as its aviation, fuel and lubricants operations, proceeding once it has found the "safest way" to do so. But future government directives could prompt Shell to adjust the strategy.
The company previously announced it would exit its partnerships with Gazprom, ending its 27.5% shareholding in the 9.6mn metric tons/year Sakhalin-2 LNG facility, as well as loans to the Nord Stream 2 pipeline and a 50% equity stake with Gazprom Neft in the Salym petroleum development and Gydan licence venture.
Van Beurden said the company will also join aid partners and humanitarian agencies in Ukraine in the coming days to allocate monies from the charitable fund it announced yesterday.
"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 van Beurden. "[The] 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.
"But ultimately, it is for governments to decide on the incredibly difficult trade-offs that must be made during the war in Ukraine. We will continue to work with them to help manage the potential impacts on the security of energy supplies, particularly in Europe."