Investment in Russia’s oil and gas upstream needed for expanding the country’s oil and gas production capacity has fallen behind as U.S. led sanctions bite Sigal Mandelker, under secretary for terrorism and financial intelligence said in prepared testimony.
Investment in Russia’s oil and gas upstream needed for expanding the country’s oil and gas production capacity has fallen behind as U.S. led sanctions bite Sigal Mandelker, under secretary for terrorism and financial intelligence said in prepared testimony.
Russian Producers achieved record profits with oil prices surging in 2018 but flagging upstream investment has limited production expansion and improvements.
Mandelker in prepared testimony for the Senate Banking Committee says that US sanctions imposed after Russia’s military intervention in Ukraine in 2014 have had measurable impacts.
- Foreign direct investment into Russia has fallen 5% since 2013
- Direct investment from the US has fallen 80% in that time
Hundreds of millions of dollars in Russian assets in the United States, and state-owned banks and other entities likely face higher financing costs because of Treasury’s ban on debt purchases, she said in the prepared remarks.
“Russia is taking note of these impacts,” Mandelker said.
Mandelker says Russia’s “malign activities” continue but it’s “adventurism” has been checked by the knowledge that the US can bring more economic pain through additional sanctions. The Trump administration has sanctioned 217 Russian-related individuals and entities, including oil company Surgutneftegaz and power company EuroSibEnergo, since January 2017.
Targets include heads of major state-owned banks and energy firms, and some of Putin’s closest associates. Mandelker will say that Treasury shares Congress’ resolve to counter Russian malign activity.
“As companies across the globe work to distance themselves from sanctioned Russian persons, our actions are imposing an unprecedented level of financial pressure on those supporting the Kremlin’s malign agenda and on key sectors of the Russian economy,” she said in the prepared remarks.
On Friday Russia’s natural resources ministry said in a reportthat US sanctions have limited new gas project development in the country, especially from offshore and at hard-to-extract fields. Russian producers had previously reported coping well with US sanctions that limited access to Western financing and technology for new Arctic, deepwater and shale projects Platts reported.
“In 2016-17, not a single significant field has been launched, gas-producing companies have focused their attention on working at projects that had already been launched,” the Russian ministry said.
Source: Platts
From The TradersCommunity Research Desk