Blood money

Hand over $1B of Russian ‘blood money,’ Ukraine tells Shell

Energy firm has a moral duty to donate surprise wartime windfall, Kyiv says.

BY GABRIEL GAVIN

Oil and gas giant Shell must donate more than $1 billion in unexpected profits from the potential sale of its assets in Russia to help rebuild Ukraine, according to a top Kyiv official.

In a letter to CEO Wael Sawan, dated April 18 and seen by POLITICO, Ukrainian President Volodymyr Zelenskyy's economic adviser Oleg Ustenko called on Shell to share with Ukraine any profits from a potential Russian buyout of the British firm's stake in a Siberian fossil fuel venture.

“If completed, this sale would represent the transfer of more than $1 billion in Russian cash into Shell’s accounts. That would be blood money, pure and simple,” Ustenko wrote.

“We call on Shell to put any Russian sale or dividend proceeds to work for the victims of the war — the same war that those assets have fuelled and funded,” he added.

Following the full-scale invasion of Ukraine last year, Shell announced it would exit the Russian market and write off up to $5 billion of assets and investments in the country as a result.

That included a 27.5 percent stake in the Sakhalin-2 project, a major oil field and offshore gas drilling venture in the Russian far east. The company wrote down around $1.6 billion for its stake in the site, and the Kremlin's move to nationalize the venture in July last year raised concerns the firm would lose its capital.

However, Russian business media reported earlier this week that the government signed off on a trade in which the country’s second-largest gas producer, Novatek, would buy out Shell’s stake for 95 billion rubles — currently worth around $1.16 billion. Shell has previously said it is not involved in any negotiations on the issue.

Shell declined to give a public comment, but pointed out that the company is not actively engaged in any business with ongoing operations inside Russia, is not party to any current negotiations for the sale of a stake in Sakhalin-2 and has no clarity over what would happen to the proceeds from such a sale.

“We appreciate that as of this moment, Shell may not have a choice on whether to accept this offer,” Ustenko conceded in the letter, but maintained there is an “overwhelming” moral case for donating any such profits.