When politics and energy collide


News from Downstream Today (and reported elsewhere too), that Shell’s plans to expand its LNG business could be scuppered by the latest western sanctions planned against Russia.

Shell have, for some time, had a tie-up with Russian Gas Major Gazprom, which includes operating the large LNG facility Sakhalin-2 in the Pacific. But

On Friday the U.S. government said it was restricting exports, re-exports and transfers of technology and equipment to the Yuzhno-Kirinskoye field.  Shell, with considerable assets in the United States, would face consequences if it went against the sanction, as would other potential foreign investors.

The intention of these new sanctions is to target future projects rather than tackle current supplies that might cause prices to rise.

Last year, Washington slapped sanctions on an Arctic project that state-owned Russian oil major Rosneft planned to develop with U.S. oil major ExxonMobil, effectively forcing the two companies to suspend drilling despite the discovery of oil.

It’s a dangerous game to play, while restricting exploration clearly hurts Russian exports it is also damaging to western oil companies who have to keep replenishing their reserves of oil and gas to keep shareholders happy and provide ongoing work for their staff – and Engineering contractors too.