Home > News > World
Thursday April 24, 2014 MYT 6:20:41 PM
Thursday April 24, 2014 MYT 6:20:41 PM
by denis dyomkin
BIROBIDZHAN, Russia (Reuters) - Russia warned foreign companies working in the oil and gas sector that if they quit the country over Ukraine-related sanctions, they would not be able to return any time soon.
Natural Resources Minister Sergei Donskoy said on Thursday that foreign firms had not so far signalled they would withdraw from projects in Russia, the world's top crude oil producer, but that there would be a price to pay if they did.
"It is obvious that they won't return in the near future if they sever investment agreements with us, I mean there are consequences as well," Sergei Donskoy told reporters in the city of Birobidzhan in Russia's Far East.
"Russia is one of the most promising countries in terms of hydrocarbons production. If some contracts are severed here, then, colleagues, you loose a serious lump of your future pie."
Russia's oil and gas industry depends on foreign investment and technology, especially in projects involving hard-to-recover deposits.
The United States and the European Union have imposed visa bans and asset freezes on a few Russian individuals in protest at Russia's annexation last month of Ukraine's Crimea peninsula.
However, they have warned that harsher sanctions, affecting key sectors of the Russian economy could be imposed in days unless Russia implements the terms of an international agreement signed last week intended to defuse the Ukraine crisis.
Moscow has accused Ukraine of failing to implement the Geneva deal and has warned that it may cut gas deliveries to Ukraine over an unpaid bill. Russia supplies about a third of European gas demand, half of it through Ukraine.
Capital outflows from the country have surged as international tensions have worsened and investors have moved their money out of Russia.
Central bank data released earlier this month showed an estimated $63.7 billion (37.9 billion pounds) in net capital outflows in the first three months of the year, the same as for the whole of 2013. The World Bank has said this year's total could reach $150 billion.
The surge coincides with an overall slump in investment and a sharp deterioration in business confidence, as forecasters slash economic growth forecasts.
Nevertheless, Donskoy said Western oil majors BP and Royal Dutch Shell were sticking with their projects in Russia.
BP owns a 19.75 percent stake in Kremlin-controlled energy giant Rosneft, which accounts for about a third of BP's oil output.
BP Chief Executive Bob Dudley visited Moscow earlier this month and said the company was "rock solid" with its Rosneft investment and that it was "business as usual".
A few days later, Shell Chief Executive Ben van Beurden also came to Moscow and told President Vladimir Putin the company was committed to expansion in Russia.
Shell already has an oil-producing project with Gazprom Neft, Gazprom's oil arm, and has started to tap hard-to-recover oil in Russia.
Van Beurden confirmed that Shell had agreed with Gazprom to expand the Sakhalin-2 liquefied natural gas plant which produces 10 million tonnes of LNG per year.
Russia has signed deals with other international majors including ExxonMobil, Eni and Statoil, mainly relating to projects in the Arctic.
Donskoy said that if companies did decide to "diversify their investments" and pull out of Russian deals, "I am sure others wishing to take their places would be found".
Gazprom, with more than 15 percent of global gas production and reserves, is expected to sign a deal next month to begin exporting gas to China from 2018.
Such a deal would mark the end of a decade of talks and some analysts say the pace has picked up partly in response to concerns that the threat of sanctions is spurring Europe to reduce its dependence on Russian energy.
Unprecedented migrant crisis forces EU to seek answers
Refugee crisis suddenly Merkel's biggest challenge
Thai police hunt two bombing suspects after weekend raids
Thai police rewards themselves after mysterious bomb suspect nabbed
Insight - Clan warfare trumps diplomacy in Mali's fragile north
Five unusual ways to build endurance for a marathon
Say it with pictures
A top 50 finish for local golfer Kelly at Yokohama Tire LPGA
Tales from pre-independence
Copyright © 1995-2015 Star Media Group Berhad (ROC 10894D)(Formerly known as Star Publications (Malaysia) Berhad)