New US sanctions will hit the oil industry

Announced by the US State Department, anti-Russian sanctions due to the poisoning of Skripals could cause "significant damage" to oil production in Russia, Bloomberg writes , citing Fitch analysts. Another bill on sanctions against the Russian Federation, which was prepared by US senators, also jeopardizes all major Russian foreign energy projects and, in general, investments in the oil industry of the Russian Federation, Kommersant . adds

Trump administration sanctions

• The 1991 law on the prohibition of the use of chemical weapons, which the United States accused Russia of violating because of the Skripal case (read more about it here ), includes a ban on the export and import of "sensitive" goods and technologies. This could be a "bitter pill" for the Russian oil industry, which is heavily dependent on foreign equipment supplies.
• If the new sanctions affect the oil and gas sector, the consequences could be quite significant, especially in the case of support from European countries, said Dmitry Marinchenko, director of the Fitch Ratings group for natural resources and commodities. According to him, new projects in the field of LNG, oil refining and petrochemistry, where American and European equipment is actively used, and there is no working alternative in Russia and China, may be under threat. In more complex projects, oil production may also suffer, Marinchenko believes. According to his forecast, Russia may need up to five to seven years to switch to alternative equipment.
• “Russian oil companies are already successfully replacing similar foreign equipment in some cases, but we are talking about its mass production. This could become a problem in the long term, as the world's largest oil companies will need a whole list of suppliers of new equipment,” says Andrey Polishchuk, an analyst at Raiffeisenbank.
• According to Bloomberg, the volume of Russian oil supplies to the United States as a whole has not changed since the first sanctions in 2014 and now stands at about 500,000 barrels per day. In the event of new sanctions, these deliveries will be impossible. However, the main risk is the refusal to cooperate under the threat of secondary measures by European and Asian buyers of Russian oil: the Russian Federation exports 5 million barrels of oil daily, most of which falls precisely on European and Asian markets.

US senators bill

• by Kommersant As follows from the document prepared by the US parliamentarians (its full text was published on Wednesday, it is under consideration in Congress), the sanctions will be applicable to oil and gas projects, the cost of which (including the estimated one) exceeds $250 million. At the same time, even if at the time the law came into force, the cost of the project was below the specified amount, but then exceeds it, investors can still be considered violators, says Yevgeny Zhilin, partner at Quorus law firm.
• Kommersant notes that the description includes, for example, Nord Stream 2, which is financed by several European companies. One such company, Uniper, has already admitted that due to possible US sanctions, it is at risk of not getting project financing.
• In addition, the document does not specify the concept of "energy project", which allows it to be interpreted as broadly as possible and to impose a ban on investments, for example, in the production of solar panels or in the exploration of hydrocarbons, Alexey Panich, partner at Herbert Smith Freehills, explains. In his opinion, "the uncertainty was made on purpose so that everyone would be afraid and ask for clarification from the US authorities."

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