Amid Ukraine crisis, Russia sanctions force exodus of Western energy
Western sanctions on Russia are forcing international energy firms to rethink or even suspend plans for oil and gas projects in Russia. The most recent round of sanctions over the Ukraine crisis also severely limits Russian energy companies鈥� access to Western financing and technology in support of developing energy resources.
Western sanctions on Russia are forcing international energy firms to rethink or even suspend plans for oil and gas projects in Russia. The most recent round of sanctions over the Ukraine crisis also severely limits Russian energy companies鈥� access to Western financing and technology in support of developing energy resources.
ExxonMobil Corp. was the first Western company to bow to Western sanctions against Moscow and聽suspend offshore Arctic drilling聽for Rosneft, the Kremlin-owned oil giant. Now another large Western energy company, France鈥檚 Total, is ending its effort with Russia鈥檚 Lukoil to explore for shale oil in Siberia.
But Total CEO Christopher de Margerie told the聽Financial Times聽that the move isn鈥檛 likely to have much of an impact on the company. 鈥淭he Lukoil joint venture is definitely stopped,鈥� he said. 鈥淏ut it hadn鈥檛 started, so it doesn鈥檛 have any impact [on Total].鈥�
Still, de Margerie made the comments the same day his company announced a program to sell $10 billion in assets from 2015 through 2017, and reduced its goal for oil production in 2017 from 3 million barrels per day down to 2.8 million barrels per day. (Related: Western Sanctions Halt Exxon鈥檚 Drilling In Russian Arctic)
Under Total鈥檚 May, 2014聽deal with Lukoil, the two companies were to develop the Bazhenov shale formation in Western Siberia. Total would have controlled 49 percent of the venture and Lukoil would have controlled 51 percent.
The most recent round of sanctions also more severely limits Russian energy companies鈥� access to Western financing and technology in support of developing energy resources.
Meanwhile, Total is moving ahead with a聽$27 billion joint project聽with both Novatek, Russia鈥檚 largest natural gas producer, and China National Petroleum Corp. to develop liquefied natural gas in Russia's Yamal peninsula in the Arctic. (Related: Kremlin Says Sanctions Will Cost Europe)
Novatek is also subject to the Western sanctions, but de Margerie told the Financial Times that he hoped it could obtain financing, 鈥渂ut not in dollars,鈥� and thereby not violate the sanctions. He said China already had committed to put up 60 percent of the project鈥檚 financing.
Total also is part of a syndicate working to develop the $50 billion Kashagan oil field in Kazakhstan. CEO De Margerie said production at the site would resume in the third quarter of 2016 -- 11 years after it was originally expected to come online.
The development of Kashagan, the largest oil field outside the Middle East, has been plagued by a series of problems that have led to delays and billions of dollars in cost overruns. De Margerie attributed the problems less to technical challenges than to poor collaboration among the project's partners, saying, 鈥淥ur reputation has really been hurt, for all of us.鈥�
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