The government of Ukraine has accused energy giant Shell of bankrolling “Putin’s war machine” by continuing to purchase Russian oil using an “accounting trick”, a claim the oil giant has denied.
In a letter sent to the oil company’s boss, the Ukrainian government attacked a loophole that appears to allow Shell to sell refined oil products as long as the mix of Russian oil is below 49%.
Earlier this month Bloomberg reported that Shell had amended contract terms in a way that appeared to allow it to blend some Russian oil into a barrel with fuel sourced from elsewhere. Traders have dubbed the product the “Latvian blend”, with less than 50% coming from Russia.
There is no suggestion of wrongdoing or illigality and Shell has denied buying Russian oil for blending.
However, Ukraine branded the potential practice “deplorable” and accused Shell of buying fuel linked to the Kremlin indirectly, an accusation strenuously denied by the energy firm.
The letter from Oleg Ustenko, an adviser to Ukrainian president Volodymyr Zelensky seen by the Wall Street Journal, said: “The notion that any company will continue to bankroll Putin’s war machine through an accounting trick is deplorable”
A spokesperson for Shell said: “Since Shell announced its plan to withdraw from Russian hydrocarbons on 8 March, we have not bought products exported from Russia for blending to be sold on as ‘non-Russian.’
“We have stopped all spot purchases of Russian crude and LNG, and eliminated the vast majority of spot purchases of refined products that may contain a proportion of Russian fuel that was blended in further up the supply chain. Our priority is to continue to reduce all of these volumes as quickly as possible.”
At the beginning of this month, Shell confirmed it would take a financial hit of between $4 billion and $5 billion dollars (£3.1bn-£3.8bn) from exiting Russia.
Its bosses said they would no longer buy oil on the so-called spot market but would continue to fulfil contracts signed before its invasion of Ukraine.
The company added: “Our self-imposed restrictive measures go far beyond any European Union (EU) measures in place today. All our activities around the world are carried out in full compliance with sanctions, applicable laws and regulations of the countries in which we operate.”