Energy giant Shell says the world doesn't have systems to trace Russian oil refined overseas. This could undermine sanctions.

• The world doesn't have systems to trace the origins of Russian oil processed outside the country, says Shell's CEO.
• This means products like diesel or jet fuel refined with Russian crude elsewhere may bypass sanctions.

The European Union is planning to ban Russian oil, while many other countries are also shunning energy products from the country — but it really isn't all that straightforward.

That's because it's not possible to identify the origin of any crude, including Russian, once it has been refined somewhere else and resold as a product from that country, Shell chief executive Ben van Beurden said on Thursday.

"At that point in time, we do not have systems in the world to trace back whether that particular molecule originated from a geological formation in Russia," he told reporters on a quarterly earnings call. "That doesn't exist," he added.

Van Beurden's comment underscores the difficulty of enforcing sanctions against Russian oil in the complexities in global supply chains.

The EU this week proposed a ban on Russian oil imports as part of a sixth package of sanctions against the country over its invasion of Ukraine. The measures will apply to fuels such as diesel and jet fuel coming directly from Russia, but not to products refined with Russian crude elsewhere.

"So therefore, diesel coming out of a 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 or isn't therefore of Russian origin," he said.

He said Shell does not refine products that use Russian oil.

Shell, the world's largest oil trader, doesn't deal with Russian counterparties and doesn't buy any material from the country on the spot market now, he said. The company is also planning to exit longer-term Russian contracts by the end of this year.

The energy giant is writing off up to $5 billion in assets after pulling out of the Russian oil and gas sector.