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: