Putin so toxic that Shell sacrifices $5billion just so it doesn’t buy Russian oil

Boris says UK won't be subjected to Putin blackmail over energy

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The oil giant confirmed it expects to take a hit of around $4-5 billion (£3.1-3.8bn) as it offloads its Russian assets and withdraws from the country. The figure comes ahead of previous expectations of a cost of around $3.4 billion (£2.6bn). Shell confirmed it would stop buying Russian crude oil on the spot market and would not renew long term contracts for Russian oil, except if under government direction. It will however be legally obliged to take delivery of oil bought under contracts signed before the Ukraine invasion.

Also included in the costs is the offloading of Shell’s joint ventures with Russian energy firm Gazprom.

Shell previously revealed stakes in a number of oil and gas projects with the firm as well as its involvement in financing and guarantees for the Nord Stream 2 pipeline.

Despite the costs involved Shell said there would be no impact on Adjusted Earnings.

The firm also reported that trading results for oil were expected to be “significantly higher” than the fourth quarter of 2021.

Since the start of Russia’s invasion of Ukraine, oil and gas prices have soared to record heights with oil at one point reaching as high as $130 (£99.46) a barrel.

While higher oil prices are a positive for sales Shell also uses a lot of energy for its own operations with the company reporting increasing operating costs as a result of “unprecedented volatility in commodity prices.”

Following today’s update Shell’s share price fell around 1.4 percent.

AJ Bell Investment Director Russ Mould said: “The modest resulting fall in its share price reflects the fact that the company is also pointing to a big benefit from surging energy prices.

“BP endured the heavier fall, likely on a read-across as investors looked at what it might imply for its much larger Russian footprint.”

Both firms have joined in a widespread withdrawal of western capital from Russia as companies increasingly look to avoid any links which might damage their brand.

Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, predicted: “Despite the eye watering costs, the share price should continue to stay reasonably resilient given the divestment far outweighs the reputational damage which could be caused had it not pulled out.”

The UK meanwhile has committed to phasing out Russian oil and gas imports by the end of 2022 with today also seeing the publication of a new energy strategy by the Government.

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Under the plans the UK will make a major pivot to nuclear power with proposals for eight new plants as the Government pledges to reverse what it calls “decades of underinvestment.”

Greater focus will also be put on gas extraction from the North Sea to reduce reliance on imported fuels, though the Government aims to have reduced gas consumption by 40 percent by 2030.

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