Kremlin officials are the prospect of lucrative investment agreements for American energy companies, apparently President Trump tries to convince that great economic profit could result from the façade cladding with Moscow in the end of the war in Ukraine and the deletion of economic sanctions against Russia.
There is no doubt that Russia has huge banks of oil and natural gas, but an attempt to lure American or other Western energy companies to do Russian projects will probably come across skepticism, not least because of the recent history of the companies in Russia.
Nevertheless, Kirill Dmitriev, a financial officer of Kremlin, expressed optimism about the prospect last week, making the potential for investment options by Western companies, including oil producers,.
Energie companies should weigh access to oil and natural gas against potential pitfalls, including reputation damage by participating in an industry that has financially a government hiding war against its neighbor.
“Russia always has enormous resources and scale” for large energy companies, said Ben Cahill, an energy analyst at the University of Texas in Austin. “But aboveground is the murderer,” he added, with the help of an industrial language for political and legal problems.
After the collapse of the Soviet Union more than three decades ago, Western energy giants, including Exxon Mobil, BP and Shell, spent years a role for themselves in the Russian oil industry.
But when Moscow invaded Ukraine in 2022, all these companies felt forced to put their companies on ice or run away, which led to billions of dollars in depreciation. During their involvement with Russia, companies such as BP, the London Energy Giant, came to their offices and other intimidation.
“How many of them would tell you that they had a happy experience?” Asked Thante Gustafson, a professor in the government at the University of Georgetown who has written several books about the Russian energy industry.
Yet there seem to be potential routes for oil companies to go back to Russia. Exxon Mobil, for example, gave up his role in a valuable oil project that it had operated on Sakhalin Island in the Russian Far East for 20 years, leaving his interest in the uncertain. “There is a potential for return,” said John Gawthorp, an analyst at Argus Media, a research agency in London.
Exxon Mobil was also considered a relatively good relationship with his Russian partner Rosneft, the oil company controlled by the State. And it had proposed to participate in other companies, including work in the North Pole area, where it drilled ten years ago, and shale drilling. Those activities were blocked by sanctions after the Russian takeover of Crimea in 2014.
Exxon Mobil refused to comment on resuming work in Russia. It has written off $ 4.6 billion about the Sakhalin project and said in a regulatory submission of 2023 that management considered the “bearing value” of the actual not repairable.
Every return from Western companies to Russia will probably have to put an end to the conflict in Ukraine and the removal of extensive sanctions imposed by the United States and the European Union on Russian oil and gas-related activities and entities. Analysts say that it can be easier for American companies to return than for their European counterparts, because Washington seems more inclined than Brussels to lift limitations.
The energy giants, whose projects take years to complete, must also be convinced that they would not be confronted with new restrictions in the case of a government change in the United States or Russia renewed aggression.
“It would be very surprising for me if an American company would make a big investment in Russia,” said Edward Fishman, a former senior official of the Ministry of Foreign Affairs for sanctions against Iran and the author of a coming book about sanctions ” Chokepoints: American: American power in the era of economic warfare ”.
Taking the wraps of the Russian industry is perhaps not in the interest of parts of the American energy industry. For example, lifting American curbs imposed by the Biden administration that focuses on the export of Russian liquid natural gas will probably create more competition for LNG from the United States, which has replaced Russian gas in Europe for the past three years. “Russian LNG on the world market is a direct competitor of USLNG,” said James Waddell, a gas analyst in Energy aspects, a research agency. “This is not something that the US government would be willing to easily give away.”
Analysts also say that the energy industry has changed since the beginning of this century. The American Shale Boom has given companies such as Exxon Mobil and Chevron alternatives for possible riskier international plays.
“The American Majors have much more attractive opportunities elsewhere in the world,” including the Gulf of Mexico, Brazil and Guyana, said Tatiana Mitrova, a researcher at the center of Columbia University about global energy policy. “Why would they choose Russia, with its high political risks?”
Analysts say that energy companies can no longer see the potential Bonanza in Russia that was there after the collapse of the Soviet Union.
At that time, the application of Western technology on Russia's enormous means improved the output of Russia considerably. It is unlikely that that performance will be repeated. Companies would probably not tell their shareholders that they “walk back to grasp a generation option,” says Peter McNally, head of sector analysts at Third Bridge, a research agency in New York.
During the three years of sanctions, Russia developed its own technologies and received support from China and India, now the most important customers for his oil. “For me it is a question mark whether American companies are welcomed as equal partners,” said Mrs. Mitrova.
The Russian oil industry and the government have always been ambivalent about sharing wealth with foreign investors. BP compiled a successful Russian oil company at the beginning of this century, but was subject to intimidation, including raids in its buildings by armed security staff. Bob Dudley, the chief of the local company, who later became Chief Executive of BP, was forced to flee Russia.
In 2013, BP managed to change his Russian holdings for a package with an interest of almost 20 percent in Rosneft, the largest Russian oil company, after the invasion of Ukraine, BP gave up his two seats on the company's board, stopped the Reporting his Russian income, and took a cost of $ 24.4 billion. Dividends of the shareholders are paid in limited Russian bank accounts to which BP has no access.
Earlier this month, Murray Auchincloss, the current Chief Executive of BP, wiped the question of an analyst to return to a more normal approach to the Russian attitude, and noted that Rosneft remained under sanctions through more than a dozen countries. “Our most important focus is now on repelling the ring,” he said.
Of all major Western energy companies, the total legs of France seems best placed to go again in Russia if the political situation allows it. The company debit $ 14.8 billion over its Russian company in 2022, but it has continued to import liquid natural gas from a facility called Yamal who helped develop it in the Russian Arctic percentage of interest. Until to give comments to give commentary, but it said that these shipments contribute to European energy security.
Analysts say that returning can be easier for smaller Western companies that offer services, such as hydraulic fracture and other technical support. SLB, the former Schlumberger, is one of the largest such companies and continues to work in Russia and says it is in accordance with sanctions.
These companies “have trained large numbers of Russian oil workers, who today have the backbone of the industry, now that the Westerners have usually left,” Mr Gustafson wrote in his coming book, “Perfect Storm”.
Rebecca F. Elliott contributed reporting.
