The British oil giant Shell said on Thursday that its decision to pull out of its projects in Russia will slash its quarterly profit by $4 billion to $5 billion.
The estimate, detailed in an update to Shell shareholders, is among the largest publicly announced financial hits by any of the hundreds of companies that have curtailed their operations in Russia or withdrawn entirely since its invasion of Ukraine.
Shell, however, made $20 billion in profit last year, and high energy prices are expected to bolster its bottom line this year — analysts expect it to make over $30 billion in 2022, according to FactSet.
Shell, Europe’s largest oil company, said in February that it would leave its joint ventures with Gazprom, the Russian state-controlled gas monopoly, and end its involvement with the Nord Stream 2 pipeline, which was suspended by Germany after the invasion. In March, the company announced a more definitive break Russia, saying that it would stop buying oil and gas from Russia and shutter its service stations in the country in a “phased withdrawal” from its operations there.
The move followed criticism of Shell for buying a cargo of Russian crude at a large discount, a purchase the company said it made because it was unable to find alternative oil sources. Shell promised to donate profits from the purchase to humanitarian aide.
On Thursday, more than a month after its latest announcement about ending business in Russia, Shell said it had not renewed longer-term contracts with Russia but said the company was “legally obliged to take delivery of crude bought under contracts that were signed before the invasion.”
According to some estimates, Shell tankers carried an average of 175,000 barrels of crude oil every day from Russia in 2021, representing about 9 percent of the company’s global refinements.
A long list of companies have pulled out of Russia, but few so far have provided dollar estimates about the financial impact on their businesses. BNY Mellon said in March that it could lose $100 million this quarter and as much as $200 million this year as it stops new business with Russia and complies with sanctions on the country. JPMorgan Chase’s chief executive, Jamie Dimon, told shareholders on Monday that the bank could lose $1 billion because of its exposure to Russia.