London (CNN Business)Russia is finding it increasingly difficult to sell its oil and gas.
sleeve (RDSA) said Tuesday it was completely breaking with Russia’s huge energy industry, immediately halting all purchases of Russian crude and closing its gas stations in the country.
The UK-based company, which announced last week that it was exiting investments in Russia, said its decision to abandon all Russian fossil fuel trading was “aligned with new government guidelines”.
Russia’s huge energy exports so far have sprung from the unprecedented sanctions imposed by the West in response to President Vladimir Putin’s decision to order his troops to invade Ukraine.
But Russian crude is already being shunned by some traders and oil companies, and US officials are debating import bans. Russia’s benchmark Urals crude is trading at a discount of $25 a barrel compared to just a few dollars before the invasion.
Moscow warned late Monday that oil prices could soar to $300 a barrel if the West banned its oil, adding that it was cutting off natural gas supplies to Germany in retaliation for Berlin’s decision to commission Russia’s Nord Stream 2 pipeline to prevent, could cut back.
“Our actions to date have been guided by ongoing discussions with governments about the need to decouple society from Russia’s energy flows while maintaining energy supplies,” Shell CEO Ben Van Beurden said in a statement. “Today’s threats to halt pipeline flows to Europe illustrate the difficult choices and potential consequences we face if we attempt to do so.”
Unless governments order otherwise, Shell said it would stop buying Russian crude on the spot market immediately and would not renew the contracts. It would also transform its supply chain to completely exclude Russian crude.
“We will do this as quickly as possible, but the physical location and availability of alternatives mean this may take weeks and will result in reduced throughput at some of our refineries,” the company said in a statement.
Shell will also immediately begin closing its service stations, aviation fuels and lubricants in Russia in “the safest way possible” and begin a phased withdrawal from Russian petroleum products, pipeline gas and liquefied natural gas.
Van Beurden said European countries face a dilemma between pressuring the Russian government over its actions in Ukraine and ensuring stable and secure energy supplies.
“But ultimately it is up to governments to decide the incredibly difficult compromises to be made during the war in Ukraine. We will continue to work with them to manage the potential impact on energy security, particularly in Europe,” he added.
He also apologized for Shell’s decision last week to buy a shipment of Russian crude to be refined into gas and diesel.
“We are very aware that our decision … while security of supply was at the forefront of our thinking – was not the right one and we are sorry,” he said.
Shell has announced it will donate profits from the remaining barrels of Russian oil it processes to a fund dedicated to alleviating the effects of the war on the people of Ukraine.
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