Oil and war are often tightly bound together, both in terms of war’s causes, and the outcomes. Indeed, Russia’s invasion of Ukraine has caused massive shifts in the oil and gas industry. Soon after the start of the war in February 2022, BP, Exxon Mobil, Shell and Equinor announced their exit from Russia – an unprecedented response to a conflict situation. The industry has always managed to navigate around geopolitical conflict, with producers claiming inherent neutrality due to their inability to choose the location and owners of oil and gas reserves. Choosing to outwardly condemn Russia’s invasion breaks with that tradition. Testing 123
Shell in particular announced it will drop its joint ventures with Russian gas giant Gazprom. This includes a 27.5 percent stake in the Sakhalin-II liquefied natural gas facility, a 50 percent stake in the Salym Petroleum Development of oil in Western Siberia and a 50 percent stake in a joint venture for oil and gas exploration on the Gydan Peninsula. Shell will also cut ties with the Nord Stream 2 natural gas pipeline project.
But how do we interpret these decisions? Is there a genuine commitment to sacrifice profits in solidarity with the people in Ukraine or even in favor of a just energy transition? In May oil giant Shell reported a record first-quarter profit of $9.1 billion, boosted by higher oil and gas prices, among other things.
In this first episode of a two-part series on Putin’s war on Ukraine and oil and gas, we focus on Shell’s business prospects and what room there is to wind Shell down. First, we ask, what does Shell’s and other fossil fuel companies’ exit from Russia mean for Shell economically and for the future of its business? Second, can such an exit somehow contribute towards a just energy transition?
We will be speaking with Laurie van der Burg, co-manager of the Global Public Finance Campaign at Oil Change International. Previously, she worked on the court case holding Shell accountable to greenhouse gas emissions targets, and knows the ins and outs of the industry’s financial side.
Show Notes
at 05 mins, Marie-Sol mentions ‘the beginning of the war, the invasion of Russia’ by which she means the beginning of this renewed attack by Russia on Ukraine – this is part of a conflict that has been ongoing since at least 2014, particularly in Crimea and the Donbas region.
Shell’s exit from Russia: https://www.shell.com/media/news-and-media-releases/2022/shell-intends-to-exit-equitypartnerships-
held-with-gazprom-entities.html
Shell’s first quarter profits: https://www.shell.com/investors/results-and-reporting/quarterly-results/2022/q1-
2022/jcr_content/par/toptasks_1119141760.stream/1651682600274/4beba247de9a1e5dcdbc1685abfdc95d07aca3f7/q1-
2022-quarterly-press-release.pdf
Oil and gas windfall profits in the UK in the wake of the war: https://priceofoil.org/2022/05/03/companies-set-to-make-11-6-
billion-windfall-on-uk-oil-and-gas-in-2022/
US oil and gas profiting from high wartime oil prices: https://priceofoil.org/2022/03/29/us-oil-and-gas-companies-set-tomake-
tens-of-billions-more-from-wartime-oil-prices-in-2022/
European and US energy companies’ contribution to Russian war chest: https://priceofoil.org/2022/03/25/european-and-usenergy-
companies-responsible-for-nearly-100-billion-to-putins-war-chest/
Beyond Oil and Gas Coalition (of governments who are going to stop signing new licenses for fossil fuel extraction): https://beyondoilandgasalliance.com/
Ember and IEEFA reports on supporting the EU’s energy needs using renewable energy and energy efficiency rather than
new infrastructure and therefore cease using imported Russian gas (in addition to the oil embargo): https://ember-climate.org/insights/research/eu-can-stop-russian-gas-imports-by-2025/
https://ieefa.org/resources/us-can-increase-lng-exports-europe