• 12 hours Shell Oil Trading Head Steps Down After 29 Years
  • 16 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 18 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 19 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 21 hours Venezuela Officially In Default
  • 23 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 1 day Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 1 day Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 2 days Rosneft Announces Completion Of World’s Longest Well
  • 2 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 3 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 3 days Russian Hackers Target British Energy Industry
  • 3 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 4 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 4 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 4 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 5 days GE Considers Selling Baker Hughes Assets
  • 5 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 5 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 5 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 8 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 8 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 8 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

Supermajors Square Off For The Top Spot In Oil

With oil prices continuing to…

Alt Text

600,000 Bpd At Risk As Venezuela Delays The Inevitable

Venezuela has once again avoided…

Alt Text

Norway’s Oil Sector Faces Existential Crisis

As exploration activity falls in…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Russian Energy Unaffected By U.S. Sanctions

Moscow

President Trump signed an array of sanctions against Russia, Venezuela, and North Korea, with those against Russia specifically targeting the country’s energy industry. The idea of sanctions, theoretically, is to pressure a government into changing its behavior. In reality, U.S. sanctions on Russia do not seem to be having the desired effect, and it’s business as usual for Russian oil and gas, according to a Reuters report citing a number of local industry insiders.

Russia’s oil industry has been the target of U.S. sanctions since 2014, with punitive measures including a cutoff of E&Ps’ access to foreign lenders, which constituted a major source of funding prior to the Crimea annexation. Oil industry insiders, however, claim to have found a way around this by reaching into their own pockets and the pockets of Russian banks.

Now, the biggest challenge, according to Reuters, is to find a way around a reduction of the period over which U.S.-based entities can supply Russian energy firms with funding. Up until August 2, this period was 90 days, which gave traders ample time for trade financing, a common practice in the oil industry that involves oil traders as third parties that pre-pay a cargo to the seller, to keep liquidity gaps under control, Reuters authors Katya Golubkova and Gleb Gorodyankin explain.

Now, this period has been cut to 60 days, which will make trade finance more challenging. In addition to using their own cash reserves or selling assets to fund trades, Russian energy companies might opt for collecting funding in small increments, which would involve more participants in a deal and will increase these companies’ operating expenses. Despite this, Reuters’ sources say, the industry will adapt to the new sanctions just like it adapted to the initial ones. Related: Russia’s Comeback In The LNG Race

One recent report supported the suggestion that asset sales are on the table as a source of cash. Lukoil said it will sell its Swiss-based trading arm, Litasco, with Reuters quoting industry sources as saying the sale plan was in response to the new U.S. sanctions. However, Lukoil announced last year that it was considering the divestment of its downstream assets in Europe to focus on its exploration and production operations at home, so it might be a bit of a stretch to draw a causal link between the sale of Litasco and the new sanctions.

Gazprom also seems unfazed by the new round of sanctions. Yesterday, a company official said at a conference call that Nord Stream-2 will continue as planned because the formulation of the new sanctions allowed for more than a single interpretation.

Nord Stream-2 is a target of the sanctions, as they include measures against foreign companies funding Russian energy projects. Nord Stream-2 is a partnership between Gazprom and five European companies including Shell, Austrian OMV, German Wintershall and Uniper, and French Engie. Each of these companies will supply 10 percent of the new pipeline’s cost.

European companies—and governments—are not too happy with the new sanctions. Last month, the French Foreign Ministry warned the new sanctions were illegal and could affect European entities and people. So did Germany’s Economy Minister Brigitte Zypries. Russia’s Prime Minister Dmitry Medvedev equated the new sanctions to a trade war, adding that the country will cope – and by the looks of things, it is.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News