RUSSIA SANCTIONS ANEW
FT - Proposed new US sanctions on Russia approved by the Senate could have "unintended consequences", hitting US jobs and oil and gas projects around the world, the industry has warned.
The legislation, which passed with a 97-2 vote in the Senate last month and is now with the House of Representatives, would prohibit US individuals and companies from providing goods, services or technology for deepwater, Arctic offshore or shale projects where Russian companies are "involved".
But oil executives and industry representatives have warned that the proposed rules are so broadly drawn that they could hurt the competitiveness of US companies and potentially hamper oil and gas production in many countries other than Russia.
Leslie Beyer, president of the US Petroleum Equipment & Services Association, wrote to Kevin McCarthy, the Republican majority leader in the House, on Monday warning that the proposed "dramatic escalation" of sanctions could hamper US companies in world markets, causing "job losses and economic contraction in . . . American communities".
Jack Gerard, president of industry group the American Petroleum Institute, said on Monday that he supported the use of sanctions but did not believe Republicans and Democrats in the Senate intended to hurt US oil companies. He urged the House to "make critical modifications to avoid these unintended consequences".
US companies hope the House will revise the curbs to narrow their scope. Some Republican members have indicated they are in favour of such a move but leading Democrats have supported the legislation exactly as it was approved by the Senate.
European energy groups have also strongly criticised the bill over measures that would bar US companies from investing in or working on oil and gas export pipelines from Russia, including the Nord Stream 2 project to deliver gas to Germany.
The planned sanctions extend the measures taken against Russia following its annexation of Crimea in 2014. They were approved to punish Russia for its alleged interference in the 2016 US election, and were added to a Senate bill tightening restrictions on Iran.
The subsequent revelations about a meeting last year between Donald Trump Jr, the eldest son of US President Donald Trump, and a Russian lawyer — to obtain information on Hillary Clinton purportedly being offered by a senior Russian official — have raised the temperature over US relations with Russia.
As drafted, the rules approved by the Senate could bar US companies and individuals from working either as partners or suppliers on any shale, deepwater or Arctic oil project anywhere in the world where a Russian company has a stake, however small.
The legislation could also stop US companies developing projects where a Russian company is not a partner but has a stake in critical infrastructure — for example in Vietnam, where Russia's state-controlled oil group Rosneft has a 32.67 per cent stake in the Nam Con Son pipeline system that brings oil and gas onshore.
Projects that could be affected include BP's $28bn Shah Deniz 2 gas development in Azerbaijan, where Lukoil, a Russian oil company subject to existing sanctions, has a 10 per cent stake. There are no US partners in the project consortium but it relies heavily on equipment and services from US companies.
The development is intended to supply gas to Europe to compete with Russian production, highlighting the potentially perverse effects of the new sanctions.
The Senate legislation states that the restrictions apply to oil rather than gas, but the wells for Shah Deniz 2 produce a light form of oil known as condensate along with gas and so could potentially be hit.
The sanctions could also affect Chevron's $37bn expansion of the Tengiz project in Kazakhstan. The oil from Tengiz flows in a pipeline through Russia to the Black Sea, so the Senate bill's bar on US companies supporting or facilitating the "construction, modernisation, or repair of energy pipelines by the Russian Federation" could apply.
"In terms of where new sanctions take us, there is some uncertainty in what is written," said a senior executive at a western oil company with projects in Russia. "If they are to make it through Congress, I would expect the language to be tightened up in some areas to clear it up."
|October, 23, 11:45:00|
|October, 23, 11:40:00|
|October, 23, 11:35:00|
|October, 23, 11:30:00|
|October, 23, 11:25:00|
|October, 23, 11:20:00|
Libya’s oil production increased steeply to the current level of 850,000 b/d from a low point in August 2016 of below 300,000 b/d. Production surpassed 1 million b/d in July.
- Revenue of $7.9 billion increased 6% sequentially - Pretax operating income of $1.1 billion increased 11% sequentially - GAAP EPS, including Cameron integration-related charges of $0.03 per share, was $0.39 - EPS, excluding Cameron integration-related charges, was $0.42 - Cash flow from operations was $1.9 billion; free cash flow was $1.1 billion
“The combination of GE Oil & Gas and Baker Hughes closed on July 3, and we are pleased with our progress during our first operating quarter. Despite the continuing challenging environment, we delivered solid orders growth and secured important wins from customers, advanced existing projects and enhanced our technology offerings in the quarter. We also achieved key integration milestones and made significant progress working as a combined company. I am now more convinced than ever that we combined the right companies at the right time,” said Lorenzo Simonelli, BHGE chairman and chief executive officer.
U.S. Rig Count is up 360 rigs from last year's count of 553, with oil rigs up 293, gas rigs up 69, and miscellaneous rigs down 2 to 2. Canada Rig Count is up 59 rigs from last year's count of 143, with oil rigs up 38 and gas rigs up 21.