Press Esc to close

WorldOil

World Oil News Center



Ukraine crisis: U.S. sanctions hit Rosneft, Novatek

MARGARET TALEV and INDIRA A. R. Lakshmanan

WASHINGTON D.C. (Bloomberg) -- The Obama administration imposed sanctions on large Russian banks, energy companies and defense firms, the latest escalation in the confrontation over Ukraine and one aimed at squeezing Russia’s $2 trillion economy. Among the companies hit were OAO Rosneft, Russia’s largest oil company and natural gas producer OAO Novatek.

“These sanctions are significant,” U.S. President Barack Obama said at the White House. “But they are also targeted, designed to have maximum impact on Russia while limiting any spillover effects on American companies or those who are allies.”

The sanctions will prevent the Russian companies from accessing U.S. equity or debt markets for new financing with a maturity beyond 90 days. That will raise borrowing costs and effectively cut off medium- and long-term U.S. financing. They don’t otherwise prohibit U.S. companies or individuals from doing business with the Russian firms.

Russia also faces possible risks that include disruptions of gas transit through Ukraine and trade sanctions by EU member states, the ministry said. Russia’s OAO Gazprom, which wasn’t on the U.S. sanction list, is the main supplier of gas to Europe through Ukrainian pipelines.

Moscow-based Rosneft produces 5 percent of the world’s oil, with more than 30 Bbbl of proven reserves. Exxon Mobil Corp. and Rosneft had been set to start their first Arctic well this year, targeting a deposit that may hold more oil than Norway’s North Sea. In return, Rosneft has the option of buying into Exxon’s portfolio of exploratory projects in the U.S. Gulf of Mexico, west Texas and the Canadian province of Alberta.

Alan Jeffers, an Exxon spokesman, said he couldn’t immediately comment on whether the new round of sanctions will disrupt the Texas-based oil producer’s exploration partnership with Rosneft.

For Exxon, Russia represents its largest exploration prospect outside its home country. Exxon and Rosneft are scheduled to begin drilling an offshore oil well as soon as next month in the Arctic that could cost as much as $700 million to complete.

07/16/2014

 

Bookmark and Share


WO DATA HUB

EngineeringTablesIcon-Large

Engineering Data Tables

World Oil's specialized upstream Engineering Data Tables featuring the Drill Bit Classifier, Tubing Tables and more. Get Total Access today.

WO SUPPLEMENTS

2013 Fracturing Technology

2013 Fracturing Technology

MEDIA CENTER

By Digital Publisher

Drill Bit Classifier World Oil published its renowned Drill Bit Classifier in September 2013. The Drill Bit Classifier is a comprehensive listing of major manufacturers' d...

ENERGY EVENTS

Upcoming Events