Energy giant Shell announced Tuesday plans to withdraw from its involvement in all Russian hydrocarbons, including crude oil and natural gas, amid Russia’s unprovoked invasion of neighboring Ukraine.
“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 said in a statement.
Shell will immediately stop buying Russian crude oil on the spot market and not renew term contracts. The company will also change its crude oil supply chain to remove Russian volumes, but said “this could take weeks to complete and will lead to reduced throughput at some of our refineries.”
In addition, Shell will shut its service stations, aviation fuels and lubricants operations in Russia, and will start a phased withdrawal from Russian petroleum products, pipeline gas and liquefied natural gas.
Other firms announced plans to pull out of Russia almost a week ago, especially on joint ventures that help Russia produce its core economic asset:
ExxonMobil pledged Tuesday to leave its last remaining oil-and-gas project in Russia, and it will not invest in new developments in the oil-rich country.
By moving to discontinue its Sakhalin-1 project in Russia, Exxon joins a growing list of energy companies, including BP and Shell, that have announced their intention to leave Russia. Other Western companies including Apple, Ford and General Motors have also distanced themselves from Moscow in recent days. …
Sakhalin-1 is “one of the largest single international direct investments in Russia,” according to the project’s website. Exxon Neftegas Limited, an Exxon subsidiary, has a 30% stake and serves as the operator. Russia’s Rosneft also owns a stake.
An Exxon spokesperson confirmed to CNN that this is the company’s last remaining Russian project. By quitting this project, Exxon would end more than a quarter-century of continuing business presence in Russia.
Shell’s decision to stop actual purchases of oil goes a step farther, but not that much farther. It would act as an incentive for the other American distributors to follow suit, if for no other reason than to keep from being seen as pro-Russian. Shell’s action more or less forced the White House into a similar calculation — otherwise, Biden risked looking more Russia-sympathetic than his betes noires in the fossil-fuel industry.
That will mean higher prices, unless the US gets more production from somewhere else. We’ll cover that in another post.