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One of America’s largest energy groups is under fresh pressure to halt operations in Russia after the Biden administration imposed sweeping new sanctions on the country’s oil sector.
Two US members of Congress told the Financial Times that oilfield services company SLB, known as Schlumberger, should withdraw from Russia or risk violating US sanctions.
Lloyd Doggett and Jake Auchincloss issued the warning in response to an order announced by the Biden administration on Friday banning the provision of U.S. oil services to Russian residents starting February 27th.
SLB, the world’s largest oilfield services group, is one of the few US-based oil companies that continues to operate in Russia after Moscow’s full-scale invasion of Ukraine in February 2022. SLB’s two biggest Western rivals, Baker Hughes and Halliburton, have sold their Russian operations. Become local manager in 2022.
A Financial Times investigation last year found that SLB had signed new contracts, advertised more than 1,000 jobs and imported equipment into Russia after competitors pulled out of the country.
Calls for the SLB to leave Russia come almost three years after Russia’s invasion of Ukraine, and come as a response to some Western companies continuing to provide critical support to Russia’s energy sector. It reflects the concern. On Monday, the FT reported that European shipyards were continuing to service Russian ships carrying lucrative gas cargoes to international markets.
SLB did not respond to requests for comment on the new restrictions. The company said on its website that it takes its responsibility for export controls and sanctions compliance seriously. “We have dedicated significant resources across the company to ensure that we meet or exceed various international laws,” SLB said.
The U.S. Treasury Department’s decision does not name Houston-based SLB or its Russia-based subsidiary. But parliamentarians and legal experts said the order increases the risk of legal problems if the SLB maintains a presence in Russia.
“A reasonable interpretation of the Treasury Department’s new guidance to “cut off access to U.S. services related to oil extraction” means keeping U.S. oilfield services companies out of Russia.” said Democratic Rep. Doggett.
Asked whether SLB and other U.S.-based oilfield services companies would have to withdraw from Russia to comply with the order, a Treasury Department spokesperson said: “The oil services ban prohibits all U.S. persons, wherever they reside, from providing oil services directly or indirectly” to any person residing in the Russian Federation. ”
In October, a bipartisan group of more than 50 members of Congress sent a letter to the Biden administration calling for tougher sanctions on U.S. oilfield services companies operating in Russia, saying that the SLB’s activities in the country had led to President Vladimir Putin’s He claimed that he was provoking the war machine.
Oilfield service providers perform the fundamental tasks needed by the global oil and gas industry, from building roads and laying pipes to drilling wells and pumping crude oil. It also provides access to advanced technology essential to support exploration and development of complex drilling operations.
Until now, Western policymakers have avoided imposing comprehensive sanctions on Russian oilfield services out of concern that they would hamper fossil fuel exports and cause global oil prices to soar. But the Biden administration said last week that the oil market is expected to be oversupplied in 2025 and new sanctions would “significantly increase” the risks associated with Russian oil trade.
Jeremy Panner, a partner at the law firm Hughes, Hubbard & Reed, said the Biden administration’s new measures mean the provision of oilfield services in Russia will be “prohibited under U.S. law and subject to sanctions.” Said to mean.
“At this time, there is no further risk of U.S. sanctions arising from SLB Russia’s operations,” he said.
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Craig Kennedy, a Russia analyst at Harvard University’s Davis Center, said the new Treasury Department sanctions appear to be aimed at SLB and would be a redemptive move. If the SLB were forced to leave Russia, it would “disturb the Kremlin” by increasing the costs imposed on the country’s oil sector, he said.
“Russia has relied heavily on state-of-the-art western reservoir modeling techniques to design efficient, low-cost development plans, something they have struggled to replicate and cannot find elsewhere. Now they’re going to be independent for the first time in 30 years,” Kennedy said.
SLB has previously violated US sanctions. The company pleaded guilty to federal charges in 2015 and paid $232.7 million to facilitate trade with Iran and Sudan.
Additional reporting from London by Chris Cook
