Shell and Vitol accused of prolonging Ukraine war with sanctions ‘loophole’

Exclusive: Ukrainian economic adviser urges energy firms to heed deadline to halt trade of ‘Russian-origin oil products’

The oil company Shell and energy trader Vitol have been accused of prolonging the war in Ukraine by exploiting a “loophole” in the EU sanctions regime to bring products derived from Russian oil into Europe through Turkey.

Oleg Ustenko, the economic adviser to the Ukrainian president, Volodymyr Zelenskiy, has urged the energy companies to commit to a deadline to halt the trade of “Russian-origin oil products” to reduce Vladimir Putin’s war coffers, the Guardian can reveal.

The EU implemented a ban on importing seaborne Russian crude oil on 5 December – the same day as a G7 price cap on Russian seaborne exports – and the ban was extended on 5 February to refined products such as diesel and fuel oil.

However, refineries in India and Turkey have increased their imports from Russia since the start of the war and have been accused of providing a “back door” for Russian oil exports to be refined, re-badged and exported around the world.

Analysis of data from commodity tracker Kpler by the non-profit group Global Witness found that Shell had imported more than 600,000 barrels of refined products into the Netherlands from Turkish refineries known to import Russian oil since 5 December.

While it cannot be proved whether the products were definitely derived from Russian crude, Turkish refineries are importing vast quantities from Russia, which can then be immediately refined or blended with crude from other nations.

The Global Witness study showed that in 2022 Turkey imported 143m barrels of crude from Russia, a 50% increase from 2021. One refinery dominated that trade – Star in Aliaga, on Turkey’s Mediterranean coast. The refinery is owned by the Turkish division of Azerbaijan’s state oil firm Socar. It took more than 60m barrels of crude from Russia in 2022, 73% of its imports.

The Izmit and Aliaga refineries, owned by Tüpraş, the largest refinery company in Turkey, also handled Russian-origin crude.

Vitol, the world’s largest independent energy trader, sourced 2.77m barrels from the Star and Izmit refineries for delivery to Latvia, Cyprus and the Netherlands since the start of the war in Ukraine, the analysis found.

Shell announced its intent to withdraw from its “involvement in all Russian hydrocarbons” last March shortly after the outbreak of war in Ukraine.

In a letter to the new Shell chief executive, Wael Sawan, seen by the Guardian, Ustenko acknowledged Shell had not broken any sanctions but said importing products from Turkish refineries “awash” with Russian oil “flies in the face of Shell’s pledge to withdraw from its involvement in Russian crude oil and petroleum products, and exploits a loophole in the EU sanctions regime”.

He added: “If western companies keep buying Russian-derived refined products, there will no incentive for refineries around the world to stop importing Russian crude.”

Shell announced record annual profits of £32bn earlier this month, aided by a spike in commodity prices linked to the war in Ukraine.

Vitol said in April 2022 that it “intends to cease trading Russian origin crude oil and product”.

“We call on Vitol to commit to a date by which it will honour its own pledge to cease trading Russian-origin oil products,” Ostenko said. The Swiss-based multinational has also reported record profits during the energy crisis.

Data shows that the EU imported 5m barrels of refined products from Turkey since 5 December, and 20m barrels from refineries that handle Russian oil during 2022. Star alone sold 17m barrels of refined products into the EU in 2022.

Europe continues to import about 250,000 barrels a day via pipeline from Russia as it attempts to balance hurting the Russian economy with concerns over supplies and fuel prices.

A Shell spokesperson said: “We remain fully committed to our pledge and have stopped purchases of Russian origin crude, as well as cargos of refined products exported from Russia.

“It is a decision we made with conviction, carefully aligned with government guidance and in compliance with sanctions, which do not exclude purchasing products refined from Russian crude in third countries where this is legally permitted.”

Vitol said: “Product exported from Turkish refineries is not Russian origin, according to all international regulations.”

It said its volumes of Russian crude oil and products traded had fallen by more than 90% since the first quarter of 2022 and “volumes are now negligible”.

“We continue with our policy of minimising purchases of Russian origin products, in full compliance with all applicable legislation and regulation in relation to sanctions,” Vitol said, adding that it continued to have a presence in Ukraine and intended to invest in the country long term.

Socar declined to comment. Tüpraş did not respond to requests for comment.


Alex Lawson Energy correspondent

The GuardianTramp

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