Russian Sanctions Hurting Western Firms
World Economy

Russian Sanctions Hurting Western Firms

The economic sanctions against Russia are producing a tangled web that often hurt western companies more than the Russian exporters.
More than six months after their initial imposition by North American and European nations in response to the Ukraine crisis, the way the measures have hit home is highly uneven with many Russian companies virtually unaffected.
In energy, for example, sanctions on the export of equipment and services involving deepwater drilling, shale development and offshore Arctic fields deny western companies the opportunities to profit from their unique technology. It’s having very little effect on day-to-day operations for Russian producers though and oil output remains close to a post-Soviet high above 10 million barrels a day.
What’s proving more significant are the limits on state oil company OAO Rosneft from accessing US capital markets. A measure that’s made almost all US and European banks leery of Russia’s entire oil and gas sector.
“There are two directions for sanctions,” said Artem Konchin, an oil and gas analyst at Moscow-based brokerage Otkritie. “One is technology. It’s not important today but tomorrow it may hurt. The other is funding, which is a more immediate issue.”
Beyond the patchy impact on the oil and gas industry, it’s striking that whole swathes of Russia’s business world remains relatively unscarred by sanctions.

  Ruble Slump
Unbundling the results of sanctions is also tricky because it takes place against the backdrop of the crash in crude oil prices and the accompanying slump in the ruble. That’s actually been a benefit for Russia’s oil exporters because while they’re getting less for their crude, their costs are plunging in local currency terms.
In dollars, costs at Russian oil fields have fallen to $2 to $8 a barrel, close to Saudi Arabia’s level of $2 to $6 a barrel, according to analysts from OAO Gazprombank, Alfa Bank and UralSib Financial Corp.
“Ruble-based lifting costs and transportation expenses dropped in dollar terms, helping Russian oil producers weather international sanctions,” said Alexander Kornilov, an oil and gas analyst at Alfa Bank.
The share price at OAO Lukoil, Russia’s largest private sector oil producer, has gained 20 percent this year even in US dollar terms because of the positive outlook for the company’s costs.
Sanctions on offshore projects won’t prevent it from proceeding with the start of its Filanovsky project in the Caspian Sea this year.

Short URL : http://goo.gl/40qc6Q

You can also read ...

Strong Euro a Headache for ECB
In recent weeks, the euro has been at its highest level,...
The New York Stock Exchange
Billionaire Warren Buffett prodded ordinary investors on...
Saudi Jan Inflation Shoots Up to 3%
Saudi Arabia’s annual consumer price inflation jumped to 3% in...
(P)GCC Facing Three Major Challenges
The (Persian) Gulf Cooperation Council—Bahrain, Kuwait, Oman,...
Remaking Scotland a Waste-Free Economy
Funding has been announced for nine Scottish projects designed...
Philippine to See 7% GDP Growth
The Philippine economy is seen to expand by 7% this year,...
Lower Electricity Bills for Cambodia Businesses
Cambodia seeks to lower electricity fees for companies in the...
Oman Reports Trade Surplus
The Sultanate of Oman’s trade balance during the first ten...