U.S. Readies New Energy Sanctions on Russia - The Wall Street Journal
The U.S. is close to imposing the toughest round of energy sanctions so far on Russia, measures that could also hit Western companies like Exxon Mobil that are working with Russian state-controlled oil companies.
The sanctions, which the European Union is expected to match, would ban energy companies from working with Russia on future oil exploration in the Russian Arctic, deep seas and shale rock formations, according to a U.S. official, Censor.NET reports citing The Wall Street Journal.
The sanctions wouldn't affect current oil production, but could imperil the future of existing partnerships, including a deal between Exxon Mobil Corp. and OAO Rosneft, the Kremlin-controlled oil giant, to drill in the Arctic Ocean.
Previous sanctions banned only the export of technology that could be used in such projects. Other companies potentially impacted include BP PLC and Royal Dutch Shell PLC.
"It'll deny them some contracts for sure, but it hurts Russia a lot more, " the U.S. official said, referring to Western energy companies. "This puts their future economic growth in danger."
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The U.S. official cautioned that the deal isn't final and may not ever be adopted, depending in part on actions by the EU and whether the cease-fire that took effect Friday between pro-Russia separatists and Ukraine holds.
Some countries, including Finland, Slovakia and Cyprus, are arguing that there has been an improvement in the situation in Ukraine since the cease-fire, and that the bloc should wait to see how it evolves. Others such as the U.K., Germany and Poland argue the EU should enact the sanctions as promised but lay out clear conditions under which they could be rolled back, the article says
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The latest sanctions would increase the concerns of business groups that worry that the U.S. efforts to punish Moscow are starting to hurt the prospects of global firms significantly, journalists beleive.
Business groups also worry that stricter sanctions will lead Russians to reject Western brands, doing long-term harm to consumer-focused firms that aren't directly affected by the sanctions and aren't facing retaliation from Russian officials.
According to documents reviewed by The Wall Street Journal, the latest EU sanctions, which haven't been implemented, would further limit the international financing of three Russian energy firms: OAO Gazpromneft, the oil arm of Russia's natural-gas giant; pipeline operator OAO Transneft and Rosneft. Five state-controlled banks, including giants OAO Sberbank and VTB Group, would also face tighter EU restrictions that cut their ability to borrow in Europe to 30 days, from 90 days in a previous round of sanctions. The U.S. is expected to match the EU with similar financial restrictions.
"The United States is finalizing measures to both deepen and broaden our sanctions across Russia's financial, energy, and defense sectors," State Department spokeswoman Marie Harf said Tuesday. "We're making our decisions on our own timeline but obviously coordinating very closely with the EU."
