MOSCOW (Sputnik) — The recent updates to the list of US sanctions imposed by the US Treasury Department on the Russian energy sector will barely have a tangible impact, according to opinions voiced by a number of Russian officials.
Russian Energy Minister Alexander Novak said he did not expect that the amendments would cause any extra problems.
"[The amendments] target deepwater, offshore projects and hard-to-extract deposits. All these sanctions had been applied before, and now it simply amounts to an explanation regarding the law, approved this past summer. The document notes that this concerns projects due to commence from January 2018. In effect, this deals with new projects. We need to study the legal aspects of these issues thoroughly," Novak told reporters.
According to Pavel Zavalny, the chairman of the Russian parliament lower house energy committee, the amendments could create only temporary problems.
"There will only be temporary difficulties, but no more than that. In the mid-term, there will be no problems, since other factors determine the current production. And the [development of the] Arctic [region] is [the issue of a] long-term perspective. Certainly, it requires the world-class technology of the offshore drilling… But the sanctions would encourage domestic research in this field," the Russian lawmaker told Sputnik.
The statements follow the Treasury Department's directive, where it prohibited US individuals and legal entities from doing business with Russian companies in projects related to deepwater, Arctic offshore or shale exploration or production starting from January 28, 2018.
Decorative Amendments
"The first impression of these new specifications is that they are mostly decorative. Of course, they will affect the interests of Russian companies because some of them have already set forth clear foreign-expansion plans… But, nevertheless, production in the country remains the most important issue, and, as we can see, no major specifications have been made in this respect," Nikolai Podlevskikh, the head of Zerich Capital Management’s analytical department, told Sputnik.
His words were echoed by Dmitry Marinchenko, the director of the Fitch Ratings group for natural resources and commodities.
"The amendments to the fourth directive on technological sanctions in the oil sector, published on October 31, contain nothing revolutionary. The updated directive contains provisions, passed in September 2014, and innovations stipulated by the new bill on US sanctions that was signed into law by [US] President Donald Trump in August 2017," Marinchenko said.
The experts agreed that the amendments would not have a negative impact on the ongoing corporate operations because they affect only those projects due to get underway after January 28, 2018.
Potential Difficulties
"[Russia's] Rosneft [energy company] has recently stated that it may face problems with geological exploration and the development of its project in the southern sector of the Black Sea. This will probably also affect projects in the Arctic region," Malov told Sputnik.
According to Podlevskikh, the speed at which new sanctions are being introduced has created the impression of "pressure" that may put moral coercive pressure on companies.
"Most importantly, this creates an uninterrupted 'conveyor belt' of toughening sanctions. Sanctions, being toughened so frequently, create the impression that this situation will continue in the future, and, of course, this is quite depressing. I believe that no company wants to suffer because these complicated projects are so highly expensive and have a long-term nature… Of course, this feeling of greater pressure persists, and this is the most unpleasant thing," Podlevskikh concluded.
In a daily survey, BKS analysts said that the amendments would impact the attitude of investors, but that they will not influence corporate investment plans, because the partnership between the major Russian companies with partners from Europe and the United States is not on the agenda for 2018.
