Shell has announced its intent to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner, aligned with new government guidance. As an immediate first step, the company will stop all spot purchases of Russian crude oil. It will also shut its service stations, aviation fuels and lubricants operations in Russia.
Shell Chief Executive Officer, Ben van Beurden had this to say:
‘Our actions to date have been guided by continuous discussions with governments about 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. Following government statements this week, I want to set out our position clearly. Unless directed by governments, we will:
Immediately stop buying Russian crude oil on the spot market and we will not renew term contracts.
At the same time, in close consultation with governments, we are changing our crude oil supply chain to remove Russian volumes. We will do this as fast as possible, but the physical location and availability of alternatives mean this could take weeks to complete and will lead to reduced throughput at some of our refineries.
We will shut our service stations, aviation fuels and lubricants operations in Russia. We will consider very carefully the safest way to do this, but the process will start immediately.
We will start our phased withdrawal from Russian petroleum products, pipeline gas and LNG. This is a complex challenge. Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer.
Shell is looking at a writedown on $400 million in Russian downstream assets, it said on Thursday, having announced $3 billion worth of other projects previously.
The oil major announced on Feb. 28 that it would quit its ventures in Russia with Gazprom and related entities including the flagship Sakhalin 2 liquefied natural gas (LNG) plant and the Nord Stream 2 pipeline project.
Shell’s writedowns come amid a mass exodus of western oil majors. BP is facing a $25 billion writedown for its planned divestment of Russian assets.
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