Shell PLC said it would donate profits from Russian oil purchases to efforts to ease the humanitarian crisis in Ukraine, after an outcry over the company’s bid for a shipment of Russian crude.
The London-listed energy company said it would choose alternatives to Russian oil where possible, but could not stop buying oil overnight because Russia contributes so much to global sourcing. Shell said its refiners needed Russian oil to continue producing gasoline and diesel.
“Without an uninterrupted supply of crude oil from refineries, the energy industry cannot ensure the continued supply of essential products to people across Europe over the coming weeks,” Shell said. “Cargoes from alternative sources would not have arrived in time to avoid market supply disruptions.”
Shell released the weekend statement after buying 100,000 metric tons of Russian Urals crude at a bargain price on Friday, paying $28.50 a barrel less than benchmark crude prices, the Journal reported. citing people familiar with the transaction, the largest discount ever.
The purchase caught the attention of the Ukrainian government, British media and rival traders because Western energy companies had shunned Russian oil since the invasion of Moscow.
Dmytro Kuleba, Ukrainian Foreign Minister, wrote on Twitter on Saturday: “A question to @Shell: doesn’t Russian oil smell of Ukrainian blood for you? I call on all conscious people around the world to demand that multinational corporations cut all trade ties with Russia.
Shell said it would donate profits from the Russian oil it buys to a fund and work with aid organizations and humanitarian agencies to determine where the money can best be deployed to alleviate the suffering of Ukrainians.
Following the imposition of sanctions on Moscow, oil traders, refiners and bankers who finance the crude trade have been reluctant to participate in oil purchases from Russia, one of the world’s largest producers. The undermining of Russian oil in Western markets has propelled prices higher, with benchmark U.S. oil prices hitting $115 a barrel on Friday, the highest level since 2008.
Shell said it has discussed with governments the effects of the war on energy markets. The company said it understands governments intend to continue supplying power from Russia for the time being to ensure security of supply.
The United States and its allies have so far spared oil and gas exports from their volley of sanctions against Moscow, seeking to prevent a spike in domestic energy prices while putting pressure on the Russian economy. . However, Secretary of State Antony Blinken said Sunday that Washington and its European partners are discussing a ban on Russian oil, a move that would deprive Moscow of a vital source of dollars.
Shell bought the shipment of Urals crude from trader Trafigura Group Pte. Russian crude prices began to fall even before the invasion as refiners turned to alternative grades of oil in the North Sea and elsewhere, fearing reputational damage and Russian oil being hit with sanctions.