Did Shell Change Its Mind About Russia?

Did Shell Oil Company change its mind about Russia? Well, it’s complicated — at least, according to Shell. When I saw the headline from the Wall Street Journal, Especially after writing in another article about how Shell was one of three oil companies cutting ties with Russia, it felt like a slap in the face. The headline read, “Shell Buys Russian Oil at Bargain Price.” Let’s look at what’s going on.

Shell announced last Monday that it was cutting ties with the Russian state-owned energy giant Gazprom. This was a result of Russia’s thirst for blood, power, and war with Ukraine. Shell’s chief executive, Ben van Beurden, gave a statement expressing his shock over what is happening in Ukraine — a full military invasion from Russia.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security.”

Perhaps that shock quickly wore off. The Wall Street Journal reported that Shell had ended its self-imposed embargo on Russian oil and scored a sweet deal on Russian oil. Shell bought 100,000 metric tons of Russia’s Urals crude four days after it said it was cutting ties. Shell paid $28.50 a barrel below the price of international benchmark Brent crude. The Wall Street Journal (WSJ) that noted this was the largest discount on record.

Although, Shell didn’t buy the oil from Gazprom — the company bought it from Trafigura Group Pte. Ltd, which is one of the largest commodity traders and largest exporters of Russian oil. Trafigura failed to sell the cargo this week at normal prices before dropping the price and drawing a bid from Shell.

Ukraine’s Minister of Foreign Affairs, Dmytro Kuleba, shared their thoughts about Shell’s recent purchase of Russian oil. He had one single question for Shell: Doesn’t Russian oil smell like Ukrainian blood?

The Kyiv Independent reported that Shell responded to Kuleba. The company said that it would try to find alternatives but it wouldn’t be able to do so immediately. Shell is continuing to buy Russian oil but promises to put its profits toward the Ukraine aid fund.

Shell also posted the following statement on Twitter:

“We are appalled by the war in Ukraine and have already made clear our intention to exit joint ventures with Gazprom—which is predominantly-owned by the Russian government-and related entities, as well as intending to end our involvement with a significant project to pipe gas from Russia to Europe.

“We have been in constant discussion with governments about the consequences of the war on the security of energy supplies. We have acted throughout in accordance with what we have understood was the intent to allow energy flows from Russia for the time being in order to provide security of energy supply.

“Yesterday we made the difficult decision to purchase a cargo of Russian crude oil. Our refineries produce petro and diesel as well as other products that people rely on every day. To be clear, without an uninterrupted supply of crude oil to refineries, the energy industry can not assure the continued provision of essential products to people across Europe over the weeks ahead. Cargoes from alternative sources would not have arrived in time to avoid disruptions to market supply.

“We didn’t take this decision lightly and we understand the strength of feeling around it.

“We will continue to choose alternatives to Russian oil whenever possible, but this cannot happen overnight because of how significant Russia is to global supply. We have been in intense talks with governments and continue to follow their guidance around this issue of security of supply and are acutely aware we have to navigate this dilemma with the utmost care. We welcome any direction or insights from governments and policymakers as we try to keep Europe moving and in business.

“We will commit profits from the limited amount of Russian oil we have to purchase to a dedicated fund. We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine.”

Shell seems intent on cutting ties with Russian oil suppliers, but in the short term is being pragmatic in critical situations. We will leave it to each of you to judge as you see fit, but the long term focus to respond to Putin’s unwarranted invasion of Ukraine seems clear.

The Russian and Ukrainian people do not want war, poverty, or to be cut off from the world. Putin, in my opinion, is sacrificing the future of Russia in order to conquer Ukraine. He wasn’t counting on the spirit of the Ukrainian people.


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