Europe: No Help for Russian Arctic Oil Projects

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Europe should withhold oil and gas technology essential to Russia's Arctic oil and gas exploration according to the European Union's (E.U.'s) Energy Commissioner, Guenther Oettinger.

The call comes on top of sanctions imposed by the U.S and E.U. on Russian energy companies last week. Industrial Info reported on financial restrictions imposed on energy and defence companies including state-owned oil company OAO Rosneft (NYSE:ROSN) (Moscow, Russia), independent gas-producing firm OAO Novatek (MCX:NVTK), and Russian Gazprombank, a third of which is owned by the world's biggest natural gas producer, OAO Gazprom (PINK:OGZPY) (Moscow, Russia). For additional information, see July 22, 2014, article - EU, U.S. Tighten Grip with Sanctions on Russian Energy Firms.

"If they don't try for peace in the east of Ukraine ... If they don't decisively try to do something to prevent escalation, then there is no reason for us to help promote the growth of their industry and develop new resources for gas and oil and therefore to put this equipment on the list of sanctions," Oettinger said a recent news conference. "The Russians see offshore oil and gas in the Arctic, for example, as a good potential for the future. But this can only be developed by hardware and software from the West, by drills and ... equipment that their industry cannot supply."

The E.U. and the U.S. want Russian to defuse the situation in neighbouring Ukraine where it has been accused of supplying weapons to pro-Russian separatists in the Crimea region, some of which were used to bring down a Malaysia Airlines passenger plane in recent weeks killing 298 people.

BP plc (NYSE:BP) (London, England), which holds a 20% interest in Rosneft, has become one of the first western companies to speak out against the sanctions.

"If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations," BP said in a statement.

Novatek is behind the massive Arctic Yamal peninsula liquefied natural gas (LNG) export project, with which it aims to export 16.5 million tons of LNG a year. The project, owned 60% by Novatek, 20% by France's Total and 20% by CNPC of China, relies partly on technology manufactured by specialist companies in the west.

With regards to the financial sanctions imposed recently, Novatek was adamant that they will not affect the project or its wider operations.

"The implementation of large-scale projects with Novatek's participation will continue as planned. Together with our international partners, the company will take all necessary measures to secure project financing and implement the [Yamal] LNG project as schedule."

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