Written By John Mutiso 📝
Shell is expected to lose $5 billion when it sells its assets in Russia as part of its strategy to exit the country in response to the country’s invasion of Ukraine.
The corporation has stated that it will no longer purchase oil from Russia, but it will honor contracts signed before to the invasion of Ukraine.
“Shell has not renewed longer-term contracts for Russian oil, and will only do so under explicit government direction, but we are legally obliged to take delivery of crude bought under contracts that were signed before the invasion,” the company said.
Due to writedowns, credit losses, and “onerous contracts,” the company stated it would take an impairment of between $4 billion and $5 billion.
The costs of Shell no longer doing business in Russia include quitting joint ventures with Gazprom.
When Shell bought Russian crude oil at a low price immediately after the war started, it was criticised.
In response to the outcry, the corporation apologized and pledged that it would stop buying oil from Russia.
According to the company, cutting relations with the country would cost between $4 billion and $5 billion.
The oil firm added that the state of the global oil markets remained “volatile”.
The company will also end its involvement in the Nord Stream 2 pipeline between Russia and Germany.
Shell’s decision came after the UK joined governments around the world in imposing sanctions on Russian companies,banks and wealthy individuals in an effort to pressure president Vladimir Putin to withdraw his forces from Ukraine.
Oil prices have risen as a result of Russia’s position as one of the world’s top producers of the commodity and fears that supplies may be affected as a result of the conflict.