Oil and gas giant Shell has defended its decision to purchase oil from Russia despite the growing number of other companies pulling out of the country due to its recent actions against Ukraine. Shell reportedly purchased the oil at a significant discount, further intensifying the backlash against its actions.
Late last week, Shell's trading arm purchased 725,000 barrels or around 100,000 metric tons of Urals crude, Russia's flagship crude, at a "record discount." Shell purchased the oil from commodities trader Trafigura at a record discount of $28.50 to the Brent, the global oil benchmark.
The transaction was the first in a public price evaluation procedure administered by S&P Global Commodity Insights since Russia invaded Ukraine, and traders estimated that it would earn Shell around $20 million after the oil is processed and sold to customers.
Trafigura is legally obligated to buy and sell a certain number of Urals cargoes every month as part of an agreement it had with Russian producer Rosneft before the Ukraine conflict. It had been looking for a buyer for one cargo of 725,000 barrels for the better part of a week, gradually raising the discount in the S&P process in the hopes of finding a counterparty.
Most traders believed the oil would be bought by a Chinese or Indian merchant or refiner rather than a big multinational oil corporation that had recently declared plans to exit Russia. While Shell's decision to purchase oil from Russia did not violate any existing Western sanctions, it still sparked widespread criticism due to ongoing conflict in the region.
Shell said in a statement that profits generated from the purchase would be donated to a fund dedicated to humanitarian efforts for victims of violence in Ukraine. The company said it is navigating the situation with "utmost care" given the "feelings" involved, and it is continuing to conduct discussions with governments regarding the issue of supply and security. Shell said it does not take such a decision lightly, and it fully understands those opposed to its decision.
Ukraine's Foreign Minister Dmytro Kuleba, who had previously called on all companies to cut their ties with Russia, was particularly vocal about his criticism of Shell's decision to buy Russian oil. In a post on social media, Kuleba posed a question to Shell, asking the company if it smelled Ukrainian blood in the oil it had bought from Russia.
In an interview, Kuleba challenged those companies still doing business with Russia. He warned them that continuing to do so may place them on the wrong side of history, and they will be judged accordingly through their actions.
