There has been an interesting little game going on with US sanctions against Russia up until now. The US pretends to seriously sanction Russia and Russia pretends it is being seriously sanctioned. But now it appears the US may be actually targeting the companies that matter to Russia.
ExxonMobil has a $50 billion contract with the Russian government to help exploit energy in the arctic. A contract that has so far gone unmolested by US and EU sanctions against Russia for its involvement in the crisis in Ukraine. The hesitancy to mess with ExxonMobil is not surprising given the company’s immense political and economic power, but given the failure of sanctions to alter Russia’s behavior in a favorable direction it seems the US might be finally willing to challenge their own oligarchs.
The U.S. and European Union are poised to halt billions of dollars in oil exploration in Russia by the world’s largest energy companies in sanctions that would cut deeper than previously disclosed.
The new sanctions over Ukraine would prohibit U.S. and European cooperation in searching Russia’s Arctic, deep seas or shale formations for crude, according to three U.S. officials who spoke on condition of anonymity because the measures haven’t been made public. If implemented, they would affect companies from Dallas to London, including Exxon Mobil Corp. (XOM) and BP Plc. (BP/)
This just got real. While US and EU demagogues have been parading themselves before the press, Exxon and BP have been going about their business without interruption. Now that those two forces can no longer apparently cooperate it will be interesting to see who wins the struggle.
There is no real good guy here but watching the neocons and oil barons fight should be interesting. There is little doubt that Russia will shrug off the sanctions and find other companies to help them get the oil. Did the US and EU just create yet another business opportunity for China?
Photo by Egeswender in public domain.