Ongoing tensions between the U.S. and Russia continue to unfold, even as allegations of President Trump’s involvement in Russian meddling in the 2016 presidential election looks like it will finally lose steam. The Senate Intelligence Committee is approaching an end to its two-year investigation into meddling in the controversial election, and Democrats and Republicans on the committee both say they have found no direct evidence to connect the Trump campaign in a conspiracy with Russia. While that's good news for Trump, arguably one of the most embattled and divisive presidents in U.S. history, it still won’t lead to better bilateral relations between Washington and Moscow in the foreseeable future.
One reason for this geopolitical quandary is that Russia has its hands in too much that contradicts U.S. policy, ranging from nuclear and ballistic missile development concerns, being on the opposite sides of the ongoing Syrian Civil War, Moscow’s cozy relationship with Iran as well as its support of embattled Venezuelan President Nicolás Maduro.
Consequently, a bipartisan group of senators introduced a bill last week that seeks to impose stiff new sanctions on Russia over still simmering allegations of election meddling in addition to continued aggression against Ukraine. CNBC said last week that the threat of more sanctions was the latest congressional effort to push President Trump to ratchet up Washington's response to Moscow, something the president has been hesitant to do. Russia for its part, already bruised both financially and geopolitically from five years of American sanctions, is downplaying the threat of more sanctions. Related: Where Will Putin Build His Next Gas Pipeline?
"I did not warn, I just said that this is senseless, nothing else. I said that the goal of this move is unclear. If they did not understand that the sanctions are not working, I feel sorry for them,” Russian Foreign Minister Sergey Lavrov said in an interview last week. However, feeling sorry for the U.S. or not, the threat of more American sanctions has some in the Russian energy sector on edge.
Russian energy sector on edge
Russian Finance Minister Anton Siluanov said that the bill introducing new sanctions against Russia aims to sabotage the country’s Arctic LNG 2 project, but Moscow will launch the project even if it has to do it on its own. Moscow-based media outlet RT said the bill would also target Russia’s foreign debt, banking sphere and energy sector, and LNG projects abroad, including the massive Arctic LNG 2 project developed by Russian natural gas producer Novatek. French oil major Total has recently joined the project, while Chinese investors also show strong interest in it. In late December, Japan’s Mitsui & Co. also entered talks with Novatek over participation in the project.
Siluanov said that if the U.S. proceeds with the punitive measures, it’s unclear how foreign partners may react, but that “business interests will prevail.” He said Russia can turn the project into reality on its own. “In any case we will implement this Arctic LNG project because we have the resources.” He added that Russia may consider using public funds due to the growing capacity of Russia’s sovereign wealth fund, which is to surpass 7 percent of GDP this year.
The Arctic LNG 2 project, with an estimated price tag of US$35 billion, will be built in Northern Siberia and is expected to start operations in 2022-2023. At full capacity, it will produce 19.8 million tons of LNG per year. Two weeks ago, Novatek announced that its Yamal LNG project, it first in the Arctic, had shipped 10 million tons of LNG since its first train opened on December 5, 2017.
By Tim Daiss for Oilprice.com
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I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets… More