Thursday, December 7, 2023

Limp US Sanctions Bypass Russia’s Energy Majors

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The US Treasury blacklisted Rosneft Chairman Igor Sechin but Russia’s top oil producer itself was not placed on the black list. Sechin, an oil tycoon and former KGB official seen a member of Russian President Vladimir Putin’s inner circle, was among seven Russian people sanctioned on 28 April by Washington for their roles in the escalating Ukrainian crisis.

“The fact that the sanctions have targeted Sechin personally, but not Rosneft, suggests that they are largely symbolic,” Julian Lee, a senior energy analyst at London’s Centre for Global Energy Studies (CGES), told New Europe on 29 April,

“Nobody seems to want to take the step of targeting directly Russia’s state-owned oil and gas companies, probably because of the risk that it would do at least as much damage to their Western partners (Exxon Mobil, BP, ENI, Shell, Total, etc.) as it would to Russia,” Lee added.

On 28 April Rosneft said it was moving ahead with a joint effort with Exxon Mobil to explore for hydrocarbons in the Arctic waters of Russia.

Meanwhile, BP has said it remains “committed” to Rosneft. The sanctions could prevent US citizens such as Bob Dudley, BP’s chief executive, from dealing with Sechin. Dudley has a seat on the Rosneft board alongside Sechin, after signing a $27 billion deal in 2012 in which the British company effectively paid almost $15 billion for shares in the Russian oil major. BP has a 20% stake in Rosneft.

“We are committed to our investment in Rosneft, and we intend to remain a successful, long-term investor in Russia,” a BP spokesman said.

Meanwhile, Sechin shrugged off the sanctions, saying Rosneft’s work with BP would not be affected. “We understand that the American administration noticed the companies’ active actions aimed at minimising the risks, linked with the unilateral orientation of hydrocarbons exports to concrete regional markets,” he said in a statement. “I assume the latest step taken by Washington is a high mark of effectiveness of our work, moreover we assure our shareholders and partners, including American ones, that this effectiveness won’t decrease, our co-operation won’t be hurt and will dynamically evolve,” he added.

Rosneft is the world’s biggest traded oil company, producing 2.5 million barrels a day and paying $75 billion a year in taxes to the Russian state.

However, Norway’s Statoil said it is suspending its joint drilling in the Arctic High North with Rosneft, though it cited other reasons for the decision.

Exxon Mobil’s major investment plans in the Arctic are moving ahead.

Rosneft’s board of directors said on 28 April they’d work to develop the Ust-Lensky reserve area in the northern Laptev Sea and the Severo-Vrangelevsky-1 in the Chukchi Sea in eastern Russia. Both sides would also explore parts of the Kara Sea under the terms of a joint venture operation.

The US Treasury dropped plans to place Russian gas monopoly Gazprom CEO Alexei Miller on the black list after objections from Berlin and other Europe capitals alarmed by possible disruptions of gas supplies. Russia supplies about 30% of Europe’s gas. The US also did not take action against the Russian company’s financial arm, Gazprombank.

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Previously on Energy Insider:

Malta Bets On Oil, Gas: Six, Two And Even

Putin’s Slick Iranian Oil Deal Upsets Sanctions

No End in Sight for Kashagan Oilfield Woes

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media


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