SHELL has said it expects to record a charge of up to $5 billion following the company’s decision to quit Russia in response to the country launching its assault on Ukraine.
However, the company indicated that the profits made by key divisions increased in the first quarter amid the surge in the prices of oil and gas that followed the start of the conflict.
Shell announced on February 28 that it had decided to exit its joint ventures with Russian giant Gazprom and related entities. Chief executive Ben van Beurden declared Shell deplored the loss of life that he said resulted from a senseless act of military aggression.
The company indicated then that it might have to write off the $3bn value of the investments concerned, before deciding to go further a week later by announcing its intent to withdraw from involvement in all Russian hydrocarbons.
Shell said the second move would result in it ending purchases of Russian crude and closing its service stations, aviation fuels and lubricants operations in the country. It made the move having faced criticism for its decision to purchase a cargo of Russian crude after the outbreak of the war, which it said had been made with security of supplies in mind.
Other oil and gas companies have cut links to Russia in recent weeks. However, oil and gas market conditions have been favourable. The rise in oil and gas prices that followed the start of the Ukraine war followed strong increases.
In an update on first quarter trading Shell said the post-tax impact from impairment and additional charges relating to Russia activities are expected to be $4 to $5 billion. The company said trading results for its gas business are expected to be higher compared to the fourth quarter 2021. Trading results for its oil products business are expected to be significantly higher.
Shell has a big North Sea oil and gas operation.
Shell shares closed down 45.5p, at 2086p. It has a stock market capitalisation of around £160bn.
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