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Shell to Stop Buying Russian Oil and Gas, Closing all Service Stations in Russia

Published: March 8, 2022
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A photograph taken on March 8, 2022 shows the logo of energy giant Shell at a petrol station, in Bochum, western Germany. - Energy giant Shell said on March 8, 2022 it would withdraw from its involvement in Russian gas and oil, including an immediate stop to purchases of crude from the country. The company also said it would shut its service stations, aviation fuels and lubricants operations in Russia. (Image: INA FASSBENDER/AFP via Getty Images)

Shell has announced that it plans on withdrawing from the Russian oil and gas industry and that it will close all of its 500 service stations in the country after the company apologized for purchasing Russian oil last week.

Last week, Shell was defending its decision to buy oil from Russia saying that it was necessary to keep energy flowing through Europe, however the company has changed its stance and is now immediately stopping purchasing Russian crude on the spot market and it will not be renewing any term contracts.

The company indicated that it will be reevaluating its oil supply chain to remove Russian supplies however the company says this will take weeks to complete and will lead to reduced input at some of its refineries. 

In 2020, Shell was reliant on Russia for approximately 5 percent of its crude oil and natural gas liquids and around 4 percent of its natural gas. 

Shell will be closing all of its service stations in the country including aviation fuels and lubricants operations affecting 500 employees. The business is estimated to be worth approximately $400m. The company also said that it will be starting a phased out complete  withdrawal of petroleum products, pipeline gas and liquefied natural gas from the Russian market.

On Tuesday a spokesperson for Shell said, “This is a complex challenge. Changing this part of the energy system will require concerted actions by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer,” The Guardian reported.  

On Tuesday, Ben van Beurden, Shell’s chief executive said, “We are acutely aware that our decision last week to purchase 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.”

Shell purchased the oil from Swiss trader Trafigura at a discount of $28.50 a barrel. Following backlash, Shell announced that all profits from the transaction would be dedicated to a fund. 

Van Beurdan said that Shell will work with aid partners and humanitarian agencies to determine how best to use the fund to “alleviate the terrible consequences that this war is having on the people of Ukraine,” The Guardian reported. 

Last week Shell announced that it would be exiting a relationship it had with Russian oil giant Gazprom and “related entities” and that it would end its involvement in the Nord Stream 2 gas pipeline project. 

“It will exit its equity partnerships with Gazprom and related entities, including its 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development in West Siberia and the Gydan energy venture,” The Guardian reported.