After sharp criticism of the cheap purchase of Russian crude oil, the British energy company Shell has promised to donate the profits from the deal to a fund for victims of the Ukraine war.

Shell bought 725,000 barrels of crude oil in Russia on Friday for around $65 million at a record low price.

According to media reports, Shell paid $28.50 less per barrel than the Brent variety currently costs on the world market, the price of which had recently risen to $118.

The seller was the Trafigura Group, one of the largest commodity traders and exporters of Russian oil.

Philip Pickert

Business correspondent based in London.

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The deal saved Shell about $20 million off the world Brent price.

It was the first such oil deal reported by S&P Global Platts since Russia attacked Ukraine on February 24.

Crude oil is currently relatively cheap in Russia because many international buyers have pulled out.

The deal did not violate sanctions.

However, Shell's purchase drew sharp criticism.

Ukrainian Foreign Minister Dmytro Kuleba tweeted: "I was told Shell discreetly bought Russian oil yesterday.

A question for Shell: Doesn't Russian oil smell of Ukrainian blood to you?” All responsible people in the world should demand a complete severing of all business ties with Russia from multinational companies.

Dilemma for corporation

Shell responded on Saturday with a longer statement and spoke of a dilemma.

They are "horrified by the war in Ukraine" and have already announced that they will withdraw from all joint ventures with the Russian state-owned company Gazprom.

There are constant discussions with governments on the question of the consequences of the war and security of energy supply.

It was a "difficult" decision.

The globally active group will “currently let energy from Russia continue to flow” in order to maintain the supply.

Where possible, they want to choose alternatives to Russian oil, "but that can't happen overnight because Russia is so significant to global supply," Shell said.

Russia is the second largest oil exporting country in the world after Saudi Arabia.

Shell announced that the profits from the controversial oil purchase would be donated to a fund that would work with aid organizations to "alleviate the terrible consequences of the war for the people of Ukraine."

Many oil traders are already avoiding Russian oil, even though there are no Western sanctions against it yet.

State-dominated oil giant Rosneft is currently looking to sell up to 83 million barrels of Ural oil for the months of April through October through futures and is likely to do so at a similarly large or even larger discount of around $30 a barrel have to.

Not as dependent as Germany

A week ago, under pressure from the London government, Shell decided to end its four major holdings in Gazprom projects in Russia.

This includes the 27.5 percent share in the Sakhalin 2 oil and gas field with one of the most important liquid gas plants in the world and two projects in Siberia.

Shell is also withdrawing from the Nord Stream 2 pipeline.

Shell will probably have to write off a large part of the holdings, which are on the balance sheet with a total of 3 billion dollars.

British competitor BP has announced its withdrawal from the nearly 20 percent stake in the Kremlin group Rosneft.

This will even burden the balance sheet by 14 billion dollars.

The British group Centria, parent company of British Gas, is also planning to withdraw from all supply agreements with Russia, especially Gazprom.

Britain is far less dependent than Germany and some other Central European countries.

Only about 5 percent of UK gas imports and about 3 percent of gas consumption comes from Russia.

The kingdom itself produces large amounts of oil and gas in the North Sea, the largest foreign gas supplier is Norway.

Energy Minister Kwasi Kwarteng has ordered a review of the supply situation and supplies from Russia.