Some of the world’s biggest oil companies and commodity traders are at risk of disruption to their extensive business operations in Russia if the west follows through with “unprecedented” sanctions against Moscow for any further invasion of Ukraine.
The US has emphasized measures that would target Russia’s financial sector and members of President Vladimir Putin’s inner circle, rather than sanctions that would directly disrupt supplies of Russian oil and gas into Europe and potentially push elevated energy prices even higher.
However, the G7’s threat of financial and economic sanctions on “a wide array of sectoral and individual targets” could still hit oil companies such as BP, Shell and ExxonMobil, and commodity traders such as Glencore, Vitol and
Trafigura, which all have important business relationships in the country.
“Extensive sanctions would be really problematic for the energy sector, even if they don’t directly target exports,” said Livia Paggi, head of the political risk at consultancy GPW.
Russia’s energy industry is so vast and the involvement of Putin’s allies so pervasive that new sanctions would, at a minimum, force western companies “to down tools while they worked out their exposure”.
BP owns almost a fifth of Russia’s largest oil producer Rosneft. UK-listed rival Shell controls 27-5 per cent of Gazprom’s huge Sakhalin-2 offshore gas project in Russia’s far east. Exxon has been operating in the country for 25 years and producing oil and gas in eastern Russia since 2005 in a partnership involving two Rosneft affiliates.