New US sanctions may help Chinese oil & gas players into Russian market

August 1, 2014

A new round of economic sanctions against Russia by the Obama administration may open a long-awaited door for China to sweep into Russian oil and gas field, a Chinese industry insider said recently. “Almost overnight, Russian oil and gas giants such as Gazprom, Rosneft and Surgut began to actively communicate with us,” said Zhong Weiping, general manager of Jereh Group, a leading Chinese oil & gas equipment and engineering services company.

“Well drilling, completion sectors retain momentum, but meanwhile, their needs for our well intervention and stimulation are unexpectedly booming,” Zhong said.

The Obama administration is prepared to impose new, deeper sanctions on Russia for its intervention in Ukraine, which limit financing activities for some of Russia's biggest energy, financial, and defense companies, including state-controlled oil giant OAO Rosneft, the Wall Street Journal reported on Monday.

“It is likely that American economic sanctions against Russia directly cause the changes in the global oil & gas market,” Zhong said.

Since the Ukrainian crisis, the US has announced three economic sanctions against Russia, including the one against Igor Sechin, CEO of OAO Rosneft, who is also an ally of Russian President Vladimir Putin. It is predicted that US oilfield services companies such as National Oilwell Varco and Halliburton, which has many lucrative Russian contracts, may be affected, and even banned from exporting to the market.

In response, Russia shifts its focus to new players in order to speed up its exploration and production of the oil and gas reserves valued at $8.2 trillion.

Copyright, China Daily, 2014.