Shell Reveals Decision to Pull Out of Russia Has Already Cost $5 Billion
Shell said last month that it was 'appalled' by the invasion of Ukraine
International energy giant Shell has admitted its decision to pull out of Russia in response to the country’s invasion of Ukraine has cost them $5 billion.
London-based Shell said Thursday that the reduced value of Russian assets, credit losses, and “onerous” contract terms would cut earnings for the first three months of the year by between $4 billion and $5 billion.
The estimate was part of an update released before completing first-quarter earnings on May 5.
Last month, Shell said last month that it was “appalled” by the invasion of Ukraine, announcing plans to exit joint ventures with Russian state-owned energy company Gazprom.
According to Shell’s annual report, those assets alone were valued at about $3 billion.
The company said it would stop buying Russian oil and withdraw from any involvement with Russian hydrocarbons “regardless of their financial implications.”
As Brietbart noted:
Shell’s decision came as the U.K. 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.
Energy companies are under pressure to cut ties with Russia because oil and natural gas exports are crucial to financing the Kremlin and its military.
As Neon Nettle reported last month, a more disastrous scenario is playing out in diesel, which is critical in keeping the world running.
The warning was echoed by heads of one of the largest commodity trading houses and the biggest independent oil trader who were speaking at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday.
World's Largest Chemical Giant Warns of 'Total Collapse' If Putin Cuts Off Gas Supply— Neon Nettle (@NeonNettle) April 1, 2022
READ MORE: https://t.co/OpRYy00QNI
According to the FT, the imports mean Russian supplies account for about 15% of Europe’s diesel consumption.
Hardy said the shift to more diesel consumption over gasoline in Europe had helped to create shortages of fuel.
He also said refineries could boost their diesel output in response to higher prices at the expense of other oil-derived products but warned rationing was a possibility.
Torbjorn Tornqvist, co-founder and chair of Geneva-headquartered Gunvor Group, added: “Diesel is not just a European problem; this is a global problem. It really is.”
Tornqvist also warned that European gas markets were no longer functioning properly as traders faced huge demands from banks for cash to cover hedging positions.