Shell says its decision to pull out of Russia in response to the country’s invasion of Ukraine has already cost the international energy giant up to $5 billion.
The reduced value of Russian assets, credit losses and “onerous” contract terms will cut profits in the first three months of the year by $4 billion to $5 billion, London-based Shell said on Thursday. The estimate was part of an update released ahead of the release of full first-quarter results on May 5.
Shell said last month it was “appalled” by the invasion of Ukraine as it announced plans to exit joint ventures with Russian state energy company Gazprom. Those assets alone were valued at around $3 billion at the end of last year, according to Shell’s annual report.
The company later said it would stop buying Russian oil and withdraw from any involvement in Russian hydrocarbons “regardless of the financial implications”.
Shell’s decision came as the UK joined governments around the world in imposing sanctions on Russian companies, banks and wealthy individuals in a bid to pressure President Vladimir Putin to withdraw his Ukrainian forces.
Energy companies are under pressure to sever ties with Russia as oil and natural gas exports are crucial to fund the Kremlin and its military.