Shell PLC said it would donate profits from purchases of Russian oil to efforts to alleviate the humanitarian crisis in Ukraine, after an outcry over the company’s bid for a cargo of Russian crude.
The London-listed energy company said it would choose alternatives to Russian oil where possible but that it couldn’t stop buying the oil overnight because Russia contributes such a big chunk of global supplies. Shell said its refiners require some Russian oil to keep producing gasoline and diesel.
"Without an uninterrupted supply of crude oil to refineries, the energy industry cannot assure continued provision of essential products to people across Europe over the weeks ahead," Shell said. "Cargoes from alternative sources would not have arrived in time to avoid disruptions to market supply."
Shell issued the weekend statement after buying 100,000 metric tons of Russia’s 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 biggest discount on record.
The purchase caught the attention of the Ukrainian government, the British media and rival traders because Western energy companies had shunned Russian oil since Moscow’s invasion.
Dmytro Kuleba, Ukraine’s foreign minister, wrote on Twitter Saturday: "One question to @Shell: doesn’t Russian oil smell Ukrainian blood for you? I call on all conscious people around the globe to demand multinational companies to cut all business ties with Russia."
Shell said it would give profits from Russian oil it buys to a fund and would work with aid organizations and humanitarian agencies to work out where the money can best be deployed to alleviate suffering among Ukrainians.
Following the imposition of sanctions on Moscow, oil traders, refiners and the bankers who finance the trade in crude, balked at taking part in oil purchases from Russia, one of the world’s largest producers. The sapping of Russian oil from Western markets propelled prices higher, with benchmark U.S. oil prices hitting $115 a barrel on Friday, the highest level since 2008.
Shell said it had been in discussion with governments about the effects of the war on energy markets. The company said its understanding was that governments intended energy to keep flowing from Russia for the time being to ensure security of supply.
The U.S. and its allies have so far spared oil and gas exports from their volley of sanctions on Moscow, seeking to prevent a leap in domestic energy prices while they apply pressure on Russia's economy. However, Secretary of State Antony Blinken said Sunday 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 cargo of Urals crude from trader Trafigura Group Pte. Ltd. Prices for Russian crude began to drop even before the invasion as refiners turned to alternative grades of oil in the North Sea and elsewhere, fearing reputational damage and that Russia's oil could be hit by sanctions.