Shell PLC (LSE:SHEL, NYSE:SHEL) said it intends to make a phased withdrawal from involvement in "all Russian hydrocarbons", including crude oil, gas, petroleum products and LNG.
While many governments were applying sanctions to Russia and other companies were self-sanctioning, the FTSE 100 oil giant was revealed over the weekend to have purchased a cargo of Russian crude oil.
Although the purchase did not violate any Western sanctions, the decision had received widespread criticism, which was not allayed by the last week that it intends to end its involvement in the Nord Stream 2 pipeline project and exit its equity partnerships with state-owned Gazprom.
The West is yet to impose any restrictions on Russian oil and gas, with German chancellor Olaf Scholz pushing back against calls to impose any bans with the threat of stagflation looming, and with the Kremlin threatening to retaliate by cutting off gas supplies.
As a first step, Shell said it will immediately stop all spot purchases of Russian crude oil and begin the process of shutting its service stations, aviation fuels and lubricants operations in Russia.
“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry," said chief executive Ben van Beurden.
He said that the company's actions "have been guided by continuous discussions with governments about the need to disentangle society from Russian energy flows, while maintaining energy supplies".
Following government statements this week, van Beurden said Shell will, unless directed by governments, immediately stop buying Russian crude oil on the spot market and will not renew term contracts, change its crude oil supply chain to remove Russian volumes and begin removing Russian elements from its supply chain.
He said removing Russia from its crude oil supply chain could take weeks to complete and will lead to reduced throughput at some refineries, due to the physical location and availability of alternatives.
A withdrawal from Russian petroleum products, pipeline gas and LNG is "a complex challenge", van Beurden said, and will "require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer".
He said the challenges for other countries underlined the dilemma between putting pressure on the Russian government over its invasion of Ukraine and ensuring stable energy supplies across Europe.
“But ultimately, it is for governments to decide on the incredibly difficult trade-offs that must be made during the war in Ukraine. We will continue to work with them to help manage the potential impacts on the security of energy supplies, particularly in Europe," the CEO said.