Can Russias Arctic Oil Boom Survive U.S. Sanctions?
Russia is betting big on offshore Arctic oil and gas projects and onshore deposits in Siberia to offset oil production declines at maturing fields and to become a dominant liquefied natural gas (LNG) player worldwide.
But the major Russian oil and gas companies have been banned from access to western capital, which they need in order to cooperate with U.S. and European oil majors in exploring and developing resources in harsh environments. The U.S. and EU sanctions on Russias oil and gas sector, first imposed in 2014, have driven away the worlds supermajors from ambitious projects in the Arctic offshore and in shale formations in Siberia.
Russian companies are left without partnerships in technology needed to explore, drill, and potentially produce and process hard-to-extract oil and gas resources.
For places like the Arctic and shale formations in Siberia, its not only the challenging and expensive exploration and drilling that is holding back significant progress at oil prices languishing in the low $60s a barrel.
The sanctions also play a role in stalled projects as international oil majors fled developments in the wake of the restrictions.
Five years ago, the U.S. imposed sanctions banning collaboration with the major Russian energy companies on Russian deepwater, Arctic offshore, or shale projects with Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft. These are the largest energy firms in Russia and they dont have access to capital at western banks to develop su....