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Russia may revise US participation in hydrocarbon development over sanctions

July 17, 2014, 15:01 UTC+3 MOSCOW
If EU conduct a more reasonable policy, then Russia should create preferences for their companies and favorable investment conditions, Director of the Skolkovo Business School Energy Center says
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© ITAR-TASS/Alexei Schukin

MOSCOW, July 17. /ITAR-TASS/. Russia should consider revising US companies’ participation in developing Russian hydrocarbon resources in response to fresh US sanctions against it, Director of the Skolkovo Business School Energy Center Grigory Vygon said on Thursday.

The US government on Wednesday announced new sanctions against Russia over the events in Ukraine. The penalties will apply to individuals and companies both in Russia and Ukraine.

The third package of US sanctions vs Russia imposes limitations on economic sectors. The blacklist newcomers are VEB, Gazprombank, Rosneft oil and gas major, the Kalashnikov weapon consortium, the Uralvagonzavod mechanical engineering company, Novatek natural gas producer and others.

In contrast to the first two waves of anti-banking sanctions against Rossiya, Sobinbank, SMP Bank and Investcapitalbank, Gazprombank and VEB have been prohibited from raising foreign funds for more than 90 days. According to a source in the US administration, these measures close access for the banks to medium-and long-term financing in the US.

Difficulties, which Russian companies will experience in making borrowings abroad, threatens the implementation of large-scale projects and this may inflict serious damage on Russian oil and gas producers, the expert said.

The fresh sanctions are not critical but further penalties may be considerably more serious, he said.

“As for the oil and gas industry, Russia can revise the US companies’ participation in developing Russian hydrocarbon resources,” the expert said.

“For example, it is possible to change the terms of ExxonMobil’s participation in the Sakhalin-I oil and gas project (off Russia’s Pacific Coast), revise the company’s offshore hydrocarbon deals with Rosneft, limit access for US oil service companies, including access to hard-to-extract resources,” the expert said.

“In this case, we’ll both respond to the US and give a clear signal to Europeans that their consent to join US sanctions may affect their business as well,” Vygon said, adding that once US companies fully felt the impact of Russia’s retaliatory sanctions, they would popularly explain to the US administration that economic interests are more important than political ambitions and would stop the sanction process.

If Europeans conduct a more reasonable policy, then Russia should create preferences for their companies and favorable investment conditions for them, the expert said.

For example, Russia may admit them to the development of its strategic deposits and actively create joint ventures and consortiums with them, he added.

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