Shell accused of using 'accounting trick' to keep buying Russian oil

Shell accused of using ‘accounting trick’ to keep buying Russian oil

The Ukrainian government has criticized Shell over a “trick” that allows it to continue buying Russian oil even after the business promised to cut ties with the Kremlin.

A letter sent by Kyiv to the oil giant’s boss Ben van Beurden said it was “deplorable” that companies are continuing to “bankroll Putin’s war machine” amid concerns Russian oil is still being bought through backdoor routes.

It comes amid concerns that businesses which have vowed to ditch Russian fossil fuels are still trading in it covertly, by blending the Kremlin’s oil with crude from other sources.

In March, Shell pledged to stop purchasing crude oil from Russia on the spot market and to start withdrawing from other Russian oil products.

However, it defines refined oil products, such as diesel, as not being of Russian origin if less than 50pc of the blend is from the country.

This means that the business can theoretically still use Russian oil if it makes up as much as 49.9pc of the product. The business buys oil products from a wide range of sources, with long supply chains where Russian products can be mixed in. It stressed it had not itself bought crude from Russia to blend in to its own products.

The letter from Ukraine blasted Shell’s strategy, saying that “the notion that any company will continue to bankroll Putin’s war machine through an accounting trick is deplorable”.

Oleg Ustenko, anr to Ukrainian president Volodymyr Zelenskyy, said: “It’s advise a national shame for many governments and institutions that are financing these aggressions towards us.” The letter was first reported by the Wall Street Journal.

The EU has not banned Russian oil, because of its dependence on the product. However, it is under pressure to do so and many companies have pledged to steer clear to avoid funding Moscow’s war on Ukraine.

Oil from the country only makes up a small proportion of total UK imports, but it will be banned by the UK Goverrnment by the end of the year.

There are concerns Russian oil is now reaching the market through opaque methods used by other countries that have been sanctioned, such as Iran and Venezuela.

Experts have spotted an increasing number of tankers labeled “destination unknown” and fear this oil is then being offloaded onto other ships at sea.

Shell said earlier this month it is taking a hit of up to $5bn (£3.9bn) from ditching its Russian assets as part of its plan to exit the country.

The company was criticized for buying Russian oil at a cut price when the war began before quickly U-turning and apologizing.

The EU is considering a plan to phase out Russian oil imports to deal a big blow to the Kremlin, which is heavily relying on revenues from its hydrocarbons industry.

It would be following the lead of the UK and US after they announced an oil embargo last month. The UK allowing the market until the end of the year to adjust before it comes into force.

Shell has said it is legally obliged to accept oil deliveries from contracts sealed before the invasion of Ukraine.

A Shell spokesman added: “Since Shell announced its plan to withdraw from Russian hydrocarbons on March 8, we have not bought products exported from Russia for blending to be sold on as ‘non-Russian.’

“We have stopped all spot purchases of Russian crude and LNG, and eliminated the vast majority of spot purchases of refined products that may contain a proportion of Russian fuel that was blended in further up the supply chain. Our priority is to continue to reduce all of these volumes as quickly as possible.”

Its self-imposed restrictions go far beyond European Union requirements, and it complies with laws and sanctions around the world, the spokesman added.

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