Sanctions not enough to deter hydrocarbon-hungry firms

Russia and international oil and gas majors are cooperating even on new projects despite sanctions imposed over Ukraine. One of such new projects include Rus­sia’s South Stream gas pipeline project even though the project needs approval from the European Union. South Stream is designed to carry more than 63 billion cubic metres of gas to Europe a year by the end of the decade, meet­ing up to 15 percent of Europe’s needs

Russia has signed deals with inter­national majors on developing energy resources, mainly in the offshore Arctic region. Top Russian oil firm Rosneft has signed agreements with Shell, ExxonMobil, Eni and Statoil and its biggest shareholder after the state is London-based BP.

Bob Dudley, BP boss said that western sanctions over Russia’s ac­tions in Ukraine had not impacted the company’s business in Russia. Shell also expressed commitment to its expansion projects in Russia. Ben van Beurden, chief executive of Royal Dutch Shell told Russian President, Vladimir Putin at a meeting recently.

Shell plans to expand Russia’s only liquefied natural gas (LNG) plant with Russian partner Gazprom. Van Beurden said that Shell “are very keen to grow our position in the Russian Federation and we look forward with anticipation and confidence on a very long-term future here in Russia.” He confirmed that Shell had agreed with Gazprom to expand the Sakhalin-2 LNG plant which produces 10 million tonnes of LNG per year. The expansion plan is in line with Putin’s demand to boost production of LNG and double Russia’s global market share to around 10 percent by 2020.

Putin said in his response said; “We, of course, will pledge all the necessary administrative guidance and support.”

The United States and European Union have imposed targeted sanc­tions against a list of Russian and Ukrainian individuals and firms in retaliation for Moscow’s annexation of Crimea.

EU and US diplomats have indi­cated that they may consider wider sanctions against whole sectors of the Russian economy if Russian forces were to enter Ukraine.

Shell already has an oil-producing project with Gazprom Neft , Gazprom’s oil arm, and they have started to tap hard-to-recover oil in Russia.