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.

EU Sanctions Fail to Frighten Russia

_Moral can't stadn the heat Gas ring

The EU continues to try and arm-twist Russia into submission with increasingly tough sanctions on people and assets, but so far with little obvious impact.

As usual, the Kremlin have their own ways and means which now involve a long term deal with China as detailed here.

Russia and China signed energy, trade and finance agreements on Monday proclaimed by Moscow as proof that a policy turn to Asia is bearing fruit and will help it to weather Western sanctions over the Ukraine crisis.

The 38 deals, signed on a visit to Moscow by Premier Li Keqiang, allow for deeper cooperation on energy and a currency swap worth 150 billion yuan ($25 billion) intended partly to reduce the sway of the U.S. dollar.

They are among the first clear successes of the eastward shift, ordered by President Vladimir Putin to avoid isolation over the sanctions, since the vast nations reached a $400 billion, 30-year natural gas supply agreement in May

Oh dear.