Shell makes ‘difficult decision’ to buy more Russian crude as gas prices soar, vows profits to aid Ukraine

After announcing last week that it would be ditching its deal with Gazprom, Shell oil company admitted in a statement Saturday that it has made the “difficult decision” to purchase Russian crude oil “in order to provide security of energy supply” to the people of Europe.

“We are appalled by the war in Ukraine and have already made clear our intention to exit joint ventures with Gazprom — which is majority-owned by the Russian government — and related entities, as well as intending to end our involvement with a significant project to pipe gas from Russia to Europe,” the statement reads.

“We have been in constant discussion with governments about the consequences of the war on the security of energy supplies,” it continues. “We have acted throughout in accordance with what we have understood was the intent to allow energy flows from Russia for the time being in order to provide security of energy supply.”

As a report from Fortune reveals, those consequences could be nothing short of deadly for Europeans, who are heavily dependent upon Russian oil just to heat their homes.

Take Germany, which gets half its gas from Russia, where “the worst case is that people start dying because they can’t heat their homes,” according to Adam Pankratz, a professor at the University of British Columbia’s Sauder School of Business.

“It means freezing and possibly dead Germans,” Pankratz stated.

A whopping “60% of Russia’s oil exports go to Europe,” Fortune reports.

Which has put Shell in a difficult position: Trigger the anti-Russia movement or watch Europeans freeze.

“Yesterday we made the difficult decision to purchase a cargo of Russian crude oil,” Shell stated. “Our refineries produce petrol and diesel as well as other products that people rely on every day. To be clear, 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. Cargoes from alternative sources would not have arrived in time to avoid disruptions to market supply.”

“We didn’t take this decision lightly and we understand the strength of feeling around it,” Shell added.

If they didn’t understand it before the announcement, they certainly do now. Calls to boycott Shell came almost instantly.

https://twitter.com/MrPCJohnson/status/1500394759499972611?s=20&t=LyS1RumHpjHZqOrFZPmt9Q

 

The oil company has vowed it will do its best to buy oil elsewhere, but it is a promise that will take some time to fulfill.

“We will continue to choose alternatives to Russian oil wherever possible, but this cannot happen overnight because of how significant Russia is to global supply,” Shell explains. “We have been in intense talks with governments and continue to follow their guidance around this issue of security of supply, and are acutely aware we have to navigate this dilemma with the utmost care. We welcome any direction or insights from governments and policymakers as we try to keep Europe moving and in business.”

What profits it does make from Russian oil will, at least in part, go to providing aid to the Ukrainians.

“We will commit profits from the limited amount of Russian oil we have to purchase to a dedicated fund,” Shell states. “We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine.”

Meanwhile, in the U.S., which, according to Fortune, gets “670,000 barrels of crude oil and petroleum products each day from Russia,” gas prices are hitting record highs.

According to AAA data, as of Sunday, March 6, the national average price for a gallon of gas is $4.009, up from yesterday’s price of $3.922 and last week’s price of $3.922. And that’s for Regular.

For perspective, one year ago, the average cost of a gallon of Regular was $2.760.

It is a steady climb that shows no signs of slowing and is rapidly approaching the highest recorded average price of $4.114 in July of 2008, the year of the Great Recession.

 

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