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Shell says it could lose up to $5 billion if it leaves Russia

British oil giant Shell said on Thursday that its decision to pull out of its projects in Russia would cut its quarterly profit by $4 billion to $5 billion.

The estimate, detailed in an update to Shell shareholders, is one of the largest publicly reported financial losses by any of the hundreds of companies that have scaled back operations in Russia or pulled out entirely since its invasion. from Ukraine.

Shell, however, made $20 billion in profits last year, and high energy prices are expected to bolster its results this year – analysts expect it to make more than $30 billion in profits. 2022, according to FactSet.

Shell, Europe’s biggest oil company, said in February it would quit its joint ventures with Gazprom, Russia’s state-controlled gas monopoly, and end its involvement in the Nord Stream 2 gas pipeline, which was suspended after invasion by Germany. In March, the company announced a more permanent pause in Russia, saying it would stop buying oil and gas from Russia and close its service stations in the country as part of a “phasing out” of its operations there.

The move follows criticism of Shell for buying a shipment of Russian crude at a deep discount, a purchase the company said it made because it was unable to find other sources of oil. . Shell has promised to donate the profits from the purchase to humanitarian aid.

On Thursday, more than a month after its last announcement about ending operations in Russia, Shell said it had not renewed longer-term contracts with Russia, but said the company was “legally obliged to take delivery of crude purchased under contracts signed before the invasion.”

By some estimates, Shell tankers transported an average of 175,000 barrels of crude oil every day from Russia in 2021, accounting for around 9% of the company’s global refinements.

A long list of companies have pulled out of Russia, but few have so far provided dollar estimates of the financial impact on their business. BNY Mellon said in March it could lose $100 million this quarter and up to $200 million this year as it halts new business with Russia and complies with sanctions imposed on the country. JPMorgan Chase chief executive Jamie Dimon told shareholders on Monday that the bank could lose $1 billion due to its exposure to Russia.


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