Shell CEO Warns About Impossibility of Tracing Refined Russian Oil

Ben van Beurden, CEO of Royal Dutch Shell, speaks during a news conference in Rio de Janeiro on Feb. 15, 2016. Sergio Moraes/Reuters

Even though the West is taking every measure to limit the use of Russian oil in their regions, it may be difficult to enforce these sanctions absolutely due to the impossibility of tracing Russian oil refined and resold by other nations, according to a major oil executive.

During a first quarter webcast with reporters on May 5, Royal Dutch Shell CEO Ben van Beurden said there’s no way to test an oil sample to determine whether a particular molecule originated from a geological formation in Russia.

“Diesel coming out of [an] Indian refinery that was fed with Russian crude is considered to be Indian diesel,” van Beurden said. “It’s very hard to trace back what exactly is and isn’t therefore Russian origin.”

After Russia invaded Ukraine, Shell announced its intention to withdraw from “all Russia hydrocarbons” in a “phased manner.” During the recent first quarter 2022 results presentation, Chief Financial Officer Sinead Gorman stated that Shell has stopped the purchase of Russian crude oil and liquefied natural gas at spot prices and that the firm will not renew any long-term contracts with Moscow.

Shell has also halted spot purchases of refined products directly exported from Russia. In the first quarter, Shell took “post-tax charges” of about $3.9 billion in relation to Russian gas and oil activities, Gorman said.

Van Beurden’s comments come as the European Union is pushing forward with banning Russian oil imports as quickly as possible. European Commission President Ursula von der Leyen recently proposed such a ban as part of the bloc’s sixth package of sanctions against Moscow for invading Ukraine.

“This will be a complete import ban on all Russian oil: seaborne and pipeline, crude and refined. We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimizes the impact on global markets,” von der Leyen said in a May 4 speech at the European Parliament.

However, there has been a pushback against the proposal from some EU member states, with Hungarian Prime Minister Viktor Orban warning on May 6 that the oil ban was tantamount to dropping a “nuclear bomb” on his country’s economy.

Orban insisted on a five-year exemption from the oil ban. Hungary received 58 percent of its crude oil and oil product imports in 2021 from Russia.

Russia’s revenues from fossil fuels have soared since it invaded Ukraine in February, despite sanctions from the West.

In the first two months since the invasion, Moscow received 62 billion euros ($65.6 billion) by exporting oil, gas, and coal according to an analysis of shipping movements and cargoes by the Center for Research on Energy and Clean Air. Russia has doubled its revenues during this period, benefiting from surging prices even as volumes fell.