Shell is expected to profit $20 million from a cheap shipment of Russian oil it bought just days after the oil company announced it was withdrawing from Russia following the invasion of Ukraine.
When the London-listed company on Monday unveiled plans to exit its Russian joint venture, its chief executive, Ben van Beurden, said he was shocked by the loss of life in Ukraine resulting from an “act senseless” of military aggression, which “threatens European security”.
“Our decision to leave is one we made with conviction,” he said. “We can’t—and we won’t—stand still.”
However, on Friday, the powerful trading arm of Shell bought 725,000 barrels of Urals, Russia’s main oil, from commodities trader Trafigura, at a record discount of US$ 28.50 (R$ 144.64). against Brent, the global oil benchmark, on a delivery basis.
The transaction was the first deal completed in a public trading window managed by S&P Global Platts since Russia invaded Ukraine, and traders said Shell would earn about $20 million when the oil is placed. in its refining system and then sold to consumers.
“I’m surprised Shell lifted this load,” says a senior trader.
Trafigura is legally required to lift several cargoes from the Urals per month under an agreement it signed with Russian producer Rosneft before the war in Ukraine. She had been looking for a buyer all week for a cargo of 7.25 million barrels, steadily increasing the discount in the S&P window in hopes of finding a counterparty.
Most traders assumed the oil would be purchased by a trader or refiner in China or India, not a major international oil company that had just announced plans to withdraw from Russia.
In a statement, Shell, which in addition to being a major oil and gas producer is also one of the world’s biggest energy traders, said it was shocked by the events in Ukraine and had stopped most activities involving Russian oil.
“However, we currently buy oil and other Russian products for some refineries and chemical plants to ensure the continued production of fuels and essential products that people and businesses depend on daily.”
“We will further reduce our use of Russian oil as alternative oils become available for purchase, but this is highly complex as Russian oil plays a significant role in global supply, and in the current tight market there is a relative lack of alternatives. “
While Russian energy exports have been cut off from the tough US, UK and EU sanctions that have been imposed on Moscow and its financial system, most Western refiners, banks and shipowners shun the country’s vast commodity market.
The consultancy Energy Aspects said last week that 70% of Russian oil was “struggling to find buyers”, even at heavily discounted prices.
As big traders scoured the market for alternative sources of supply, the price of Brent rose, hitting a nine-year high of nearly $120 a barrel this week.
“In compliance with current sanctions, we are working to continue to provide energy safely to our customers in Europe and other markets,” Shell said.
Trafigura declined to comment. Earlier this week, the company said it was reviewing its stake in Vostok, the giant Arctic oil project being developed by Rosneft. Trafigura is a favorite trading partner of the Kremlin-controlled oil producer.
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