Our response to the war in Ukraine
On March 8, 2022, Shell announced its intention to withdraw from its involvement in all Russian hydrocarbons including crude oil, petroleum products, gas and liquefied natural gas, in a phased manner, aligned with government guidance, and in compliance with sanctions, applicable laws and regulations of the countries in which it operates (see www.shell.com/media-statements).
In May 2022, Shell sold Shell Neft LLC to PJSC LUKOIL and, in doing so, has exited all its downstream business (including services stations, fuels supply and lubricants) in Russia. Also in May 2022, Shell’s share in the Gydan energy exploration venture was transferred to our joint-venture partner, GazpromNeft. Gydan is in the exploration phase with no production.
In September 2021, Shell signed a binding novation agreement to take over a GasTerra gas supply contract with Gazprom Export LLC (Gazprom), with the transfer to take effect from October 1, 2022. Upon transfer, a payable to Gazprom was recorded with a corresponding receivable from GasTerra. The gas supply contract terminated in December 2022.
On March 3, 2023, Shell announced that it had completed the sale of its interest in Salym Petroleum Development Limited Liability Company to a subsidiary of GazpromNeft for which an agreement was signed on December 22, 2022.
Shell holds a 27.5% interest (minus one share) in Sakhalin Energy Investment Company Ltd (SEIC). On June 30, 2022, a Russian Presidential Decree was passed requiring the transfer of all licences, rights and obligations of SEIC into a newly created Russian company (LLC) that would assume the rights and obligations of SEIC. The decree stated that the foreign shareholders would be invited to apply for shares in that entity equivalent to their shareholding in SEIC. Shell formally advised the Russian Federation that it would not apply for shares in the LLC, that it objected to the purported transfers from SEIC to the LLC and that it reserved all rights and remedies.
Read more about our withdrawal from Russian oil and gas activities in Note 6 in our 2022 Annual Report.
Helping our staff and the people of Ukraine
Our aim is to ensure the safety of our staff and contractors in Ukraine and to support relief efforts. We offered assistance to our staff in Ukraine fleeing the war and continue to pay the salaries of those mobilised for military service. We work to keep our retail sites open in Ukraine and vital energy supplies moving. Shell only operates in territories controlled by the Ukrainian authorities. We have also provided support to our staff in Russia as they faced the uncertainty of Shell’s withdrawal by, for instance, transferring employees of Shell Neft to the new owner.
By the start of 2023, the overall amount of our humanitarian donations for the Ukraine war had reached $74 million. Our focus has been to support the people of Ukraine by working with aid organisations in Ukraine and in bordering countries, where refugees have headed in their millions.
As part of our initial efforts in Ukraine and Poland after the invasion, we pledged nearly $11 million to several humanitarian and aid organisations in Ukraine and Poland, of which $3 million was humanitarian aid to our global disaster relief partner, Mercy Corps, to help meet the immediate needs of those affected by the war in Ukraine. In addition, Shell has matched employee donations to Mercy Corps.
In March 2022, we purchased 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 and being in compliance with applicable laws, we quickly recognised that it was not the right decision and apologised. The profits from the crude oil bought on the spot market after the conflict started were donated to the Embassy of Ukraine in the UK for its WithUkraine humanitarian aid programme ($30 million), while another $30 million was donated to the UN World Food Programme to support the people impacted by the conflict in Ukraine.
Our business activities in both Russia and Ukraine in terms of financial data before the invasion are disclosed in our Tax Contribution Report 2021.