The U.S. administration has said it wants to "degrade" the oil and gas power of Russia as one of the world's top producers by suspending exports of equipment necessary for the maintenance of its oil and gas industry.
"The United States and our Allies and partners do not have a strategic interest in reducing the global supply of energy - which is why we have carved out energy payments from our financial sanctions," the White House said in a fact sheet on anti-Russian sanctions.
"But we and our Allies and partners share a strong interest in degrading Russia's status as a leading energy supplier over time. These actions will help further that goal, while protecting American consumers," the text also said.
The statement followed a decision to impose "export controls" on oil and gas extraction equipment and technology exports that are aimed at hurting both the upstream and the downstream segment of Russia's oil industry.
Bloomberg noted in a report on the news that such sanctions would probably see more companies leave Russia, notably the oilfield service majors including Halliburton, Schlumberger, and Baker Hughes, as they are the suppliers of such technology and equipment to the Russian oil industry.
Since the fact sheet mentions that the "degradation" is sought over time, it suggests that the U.S. and its allies will be seeking alternative sources of energy in the meantime. Europe is already on high alert in trying to find a replacement for Russian crude and natural gas. Even the International Energy Agency has joined the efforts, planning to release a 10-step plan for doing this.
The European Union, meanwhile, has already released steps to take in its quest for energy independence from Russia. These include "Stronger dialogue with partners on liquified natural gas, including talks with major buyers, such as Japan, South Korea, India and China "with a view to avoiding conflictual market practices in the future," and "A push for introducing minimum gas reserves by national governments to ensure the EU average level of storage filling of at least 80% by Sept. 30."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Anticipating such a move since the US sanctions were imposed on Russia, Russia has been pouring billions of dollars into exploration and development of the Arctic which is estimated to contain enough oil and gas reserves to last 100 years or more. Moreover, Russia developed a homegrown state-of-the-art technology to produce oil and gas.
A case in point is the achievement of Russian largest independent LNG producer Novatek which has managed within a few years to become a leading LNG producer with a capacity that could match Qatar’s by 2028. Moreover, Russia will be adding 1.5 million barrels to its overall oil production by 2024 from its Arctic oilfields.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
The fact is, most of the world is aligned against Russia and will be using every opportunity to massage the regime into a timely close. I doubt Putin will survive even though he is one of the more clever and careful planners. Putin will see that he is within a moral universe. He has taken things to such an extreme that it will not go well for him. I pray for the people of Ukraine and Russia.