Shell trades Russian gas despite promises to stop – BBC News

  • By Ben King
  • Business journalist, BBC News

Caption,

LNG tanker Nikolay Zubov, to dock in the UK in 2021

Shell is still trading Russian gas more than a year after pledging to withdraw from the Russian energy market.

The company is involved in nearly one-eighth of gas exports that Russia ships in 2022, according to an analysis by campaign group Global Witness.

Oleg Ustenko, adviser to Ukrainian President Vladimir Zelensky, accused Shell of receiving “blood money”.

Shell said the trade was the result of a “long-term contractual commitment” and did not violate any laws or sanctions.

As recently as May 9, a large tanker capable of carrying more than 160,000 cubic meters of gas compressed into a liquefied form – liquefied natural gas or LNG – was pulled out of the port of Sabetta, on the Yamal peninsula in Russia’s far north.

The cargo was purchased by Shell before heading to its final destination, Hong Kong.

It is one of eight LNG cargoes that Shell purchased from Yamal this year, according to data from the Kpler database analyzed by Global Witness.

Last year Shell accounted for 12% of Russia’s seaborne LNG trade, Global Witness calculated, and was among the top five Russian LNG traders that year.

It said it would stop buying Russian oil, selling its service stations and other businesses in Russia, what he had done. It has also ended its joint venture with state energy giant Gazprom.

And it said it would start a “phased withdrawal of Russian petroleum products, pipeline gas and LNG”. But it warned that it would be a “complex challenge”.

image source, Getty’s image

Caption,

Shell said last year it would close all of its workshops in Russia

Since then, it has continued to take LNG cargoes from two Russian ports, one in Yamal and one in Sakhalin in the far east.

Shell used to be a minority investor in the Sakhalin gas project, but abandoned those claims in September last year after the Russian government transferred its stake to a local business – and has not been sourcing gas from Sakhalin since.

But it is still honoring a contract with Russian LNG company Novatek, which obligates it to buy 900,000 tons a year from Yamal until the 2030s, according to Reuters news agency.

Novatek is Russia’s second largest gas company, and the taxes it pays are a significant contributor to the Russian government’s budget.

Oleg Ustenko, adviser to the Ukrainian president, said: “Quite simple: by continuing to trade Russian gas, Shell is putting money in Putin’s pocket and helping to fund Russia’s brutal aggression against the Ukrainian people.

“The huge sums generated by Shell and the entire oil industry in Russia should be used to help fund the reconstruction of Ukraine, rather than lining the pockets of their shareholders.”

A Shell spokesperson said: “Shell has stopped buying Russian LNG on the spot market, but still has several long-term contractual commitments. This is in full compliance with applicable sanctions, laws and regulations in the countries in which we operate.

“There is a dilemma between pressuring the Russian government for its atrocities in Ukraine and ensuring a stable and secure supply of energy. It is the government’s job to decide which trade-off is very difficult to make.”

Shell is the world’s largest LNG trader, which is not subject to European sanctions, making billions of dollars in profits trading oil and gas last year.

Russia massively reduced its gas pipeline shipments last year, but has increased the amount of gas it supplies by ship, including to Europe.

Britain has not imported Russian gas for over a year, while EU politicians seek to reduce the amount of Russian LNG the bloc imports. In March, EU Energy Commissioner Kadri Simson called on countries and companies to stop buying Russian gas, and not sign new contracts.

“It is long overdue that Russia’s LNG trade is viewed with the same contempt as Russia’s oil trade. Targeting Putin’s energy revenues shouldn’t be about symbolic steps but should concretely stop the massive amounts of fossil fuels fueling his rule,” said Jonathan Noronha-Gant, senior campaigner at Global Witness.

France-based energy company TotalEnergies is a minority shareholder in the Yamal project, and is also a major trader in Russian LNG, Global Witness analysis reports.

The BBC has approached TotalEnergies for comment.

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