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Russian oil and gas sector under sanctions: main threats to the sector

Russian oil and gas sector under sanctions: main threats to the sector

Political confrontation between Russia and the West is increasing.

There are speculations about economic war. No wonder the Russian oil and gas sector is the main target of Western sanctions. Direct taxes on the oil and gas sector account for half of Russia’s consolidated budget.

“If you want to punish Russia, try hitting the FES” is the action plan of political opponents of Putin.

There should be no illusions – sanctions will not be lifted in the near future but, on the contrary, they will be expanded.

The sector is already facing three types of restrictions: serious hindrances on the way to obtaining credits, marketing problems and, most importantly, the ban on supplies of new technologies to Russia. The latter is the most painful sanction. It questions implementation of LNG projects, plans for developing offshore deposits and launching serious production of tight reserves in Western Siberia.

Key topics of the report:

  • Credit sanctions

    • The situation around the debt burden of Russian companies; how critical it is?
    • Possibilities of obtaining the money from the state budget
    • Prospects of replacing western credits with eastern loans
    • The refusal-to-pay scenario; what may follow the bankruptcy of some companies

  • The problem of investments, variants of state support

    • The oil and gas sector amid reduction in capital expenses
    • Applications of companies for state support
    • Struggle of clans for resources of the National Prosperity Fund: submitted applications, their chances to be fulfilled or cut

  • Low oil prices, devaluation effect

    • Companies generate losses from cheap oil but have a possibility to earn on devaluation
    • Saving on procurement: possibilities and realities

  • Technological sanctions

    • Analysis of restrictions
    • Most acute problems
    • Influence of sanctions on offshore projects
    • Possibilities of import replacement

  • Nonresidents in Russia

    • The first abandoned joint projects: departure of western concerns from the Arctic and Bazhenov formation projects
    • Prospects of independent development of these projects
    • Prospects of privatization, participation of nonresidents in this process

  • Forecast of further developments

Contents of the report:

INTRODUCTION. WILL SANCTIONS STAY LONG? 3
Sanctions Imposed on Russia 5
Sectoral sanctions imposed by the USA and Canada 5
EU sectoral sanctions 11
Chapter 1. RESTRICTED ACCESS TO CAPITAL MARKETS: OUTCOMES FOR RUSSIAN COMPANIES 18
1.1. Debt burden of Rosneft 20
1.2. Debt burden of NOVATEK 22
1.3. Debt burden of Gazprom Neft 24
1.4. Debt burden of LUKOIL 26
1.5. Debt burden of Gazprom 27
1.6. Debt burden of Transneft 29
1.7. Surgutneftegas as unique case in Russian oil and gas sector 30
Chapter 2. YAMAL LNG CASE: WILL SANCTIONS STOP ONE OF RUSSIA'S MOST AMBITIOUS PROJECTS? 33
2.1. Financial sanctions imposed on Yamal LNG 33
2.2. State financing of Yamal LNG 37
2.3. Technological sanctions imposed on Yamal LNG 38
Chapter 3. OFFSHORE PROJECTS AFTER SANCTIONS 41
Chapter 4. TIGHT OIL PROJECTS. ONSHORE COOPERATION WITH NONRESIDENTS. PROBLEMS OF IMPORT SUBSTITUTION IN THE SECTOR, THE FATE OF SERVICES BUSINESS 58
Chapter 5. IS THERE LIFE AFTER SANCTIONS? 71
Date of release: April 20, 2015

If you are interested to obtain please contact » Elena Kim

Other issues:
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Green Agenda in Russia during Bitter Conflict with West
After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.
Oil and Gas Sector Regulation in 2022 and Prospects for 2023
Gazprom at the Forefront of Economic and Political Battles with Europe
Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07
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