Shell announced at the beginning of March that it would stop purchasing Russian crude oil on the spot market. A month later, it turns out that the oil giant is still buying Russian oil. And yet, technically, the company doesn’t lie.
On March 8, less than two weeks after the war in Ukraine started, Shell announced that it would suspend all spot purchases of crude oil. on the Russian market stopped. The group even apologized for buying extra Russian oil at a huge discount in Eastern Europe shortly after the war started.
Not all Russian oil is Russian
However, we note that a significant part of the oil that Shell buys still comes from Russia. 49.9 percent of the oil in the barrels is of Russian origin. The other 50.1 percent gets the oil giant from other countries. Thanks to such a mixture, Shell can say that the oil in those barrels does not come from the Eastern European country.
While some may find this unfair, the approach is clearly stated in Shell’s new contract terms. “Goods are considered to be of Russian origin if they are manufactured in the Russian Federation or if 50 percent or more of their content (by volume) consists of materials manufactured in the Russian Federation,” the group writes.
Bloomberg explains that the oil marketed by Shell is called “Latvian blend”. The Russian oil comes from Primosrk (near Saint Petersburg) and is shipped to Ventspils, a port in Latvia with a large oil terminal and storage capacity. This is where the mixing happens.
perfectly legal
What Shell does is also perfectly legal. Let’s not forget that the EU does not (yet?) embargo has set on Russian oil, nor on Russian gas† If Shell so desired, the group could even continue to sell 100 percent Russian gas.
Not all industry giants follow Shell’s example. TotalEnergies, for example, ensures that no cargo may come “in whole or in part” from Russia. The same goes for Repsol.
However, this affair demonstrates two things: “self-sanctions” must be taken with great caution and, if there were a real political embargo, there are already many loopholes to get around it. Meanwhile, Russia continues to fill its treasury.
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