British company profited from the opposition of other traders to Putin’s fossil fuels.
Shell broke ranks with Western traders who shun Russian oil and bought a tanker-load from the country at an unprecedented discount.
The company paid $28.50 per barrel less than the Dated Brent benchmark price for physical oil in trade, which saved millions of pounds during a time when global prices are rising.
Shell, which had promised to end its tie-ups with Russian state-owned Gazprom following Vladimir Putin’s declaration of war last week, defended the decision via Twitter, stating that Russian oil is vital for its operations.
According to the company, “We have stopped all activities that involve Russian oil.” We still purchase it, along with other Russian products, for certain chemical plants and refineries to continue production of essential fuels and products that businesses and people depend on every day.
“We will continue to reduce our use Russian oil as other crudes become available for purchase, but this is complex because Russian oil plays an important role in global supply, and in the current tight market, there is a relative shortage of alternatives.”
While Brent oil has reached a nine-year high at $118 per barrel, since the war started, Russian oil is still struggling to find a market. Although sanctions have not been imposed on Russia’s energy sector, traders continue to avoid it in fear of possible restrictions.
Shell intends to continue buying Russian oil and gas as long as it complies with Government regulations.
The company announced Monday that it would end its tie-ups with Gazprom and sell its 27.5 percent stake in Sakhalin 2 liquefied gas (LNG), plant, and stop working on Nord Stream 2 in Germany. This project was halted earlier in the month.
After a meeting with Kwasi Kwarteng (Business Secretary), the decision was made. Kwarteng later praised Shell for its decision to exit the Russian economy.
Rosneft is the Russian oil giant. It’s offering to sell up to 83,000,000 barrels of Urals oil between April and October. This oil will likely be sold at a comparable or higher discount than Shell’s purchase.
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