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HomeOil and GasU.S. State Dept. Clears Oil Service Firm SLB of Russia Sanction Violations

U.S. State Dept. Clears Oil Service Firm SLB of Russia Sanction Violations

5/1/2024

(Reuters) — The U.S. State Department believes oil services firm SLB has not violated sanctions against Russia and the company has been told what Washington is willing to accept, Assistant Secretary of State Geoffrey Pyatt told Reuters in an interview on Wednesday.

“I have had conversations with the CEO of that company… I think there is a clear understanding within SLB in terms of where the guard rails are on the sanctions policy,” Pyatt said.

The U.S. and other European countries have sought to reduce Moscow’s energy revenue through sanctions that prompted several oilfield service companies to leave since Russia invaded Ukraine in 2022. SLB has remained operating in the country, helping keep Russian oil production flowing.

“I am confident from my conversations with Treasury colleagues that SLB’s actions thus far have been in conformance with rules that OFAC, Treasury and the price cap coalition have set up,” Pyatt said.

The U.S. is determined to ensure Russia does not return to being a reliable energy partner and Washington will continue to sanction present and future energy projects, while taking care not to cause oil price shocks, said Pyatt.

SLB did not reply to a request for comment. The company last year received 5% of its revenue from Russia. It had 10,000 employees in Russia helping Gazprom Neft, Rosneft and other top energy firms pump oil and gas when the war began in 2022.

The U.S Treasury is also going after shippers, insurance companies and others that circumvent the sanctions. Russia’s oil and gas tax revenue is down about a third year-on-year, he said.

Washington is targeting Russia’s future energy projects, including liquefied natural gas (LNG), seeking to prevent Russia from sending gas that previously flowed to European customers via pipeline to global markets as LNG, said Pyatt.

“So you have seen very strong sanctions against Novatek and there is more to come in the short term on that score,” he told Reuters.

Technology sent by China to Russia to assist in its war efforts is another concern, said the Assistant Secretary of State and is one of the reasons the U.S. believes access to rare earth materials is crucial for global energy security.

The U.S. has brought together 14 countries including Korea as well as the European Union to invest tens of billions of dollars in the value chain including access to critical minerals in an effort to end China’s dominance of the trade.

“We were slow out of the blocks in terms of recognizing the moves that China was making to dominate the supply chains for these key inputs for the energy transition,” Pyatt said.

The U.S. and Korea will partner in developing batteries and electric vehicles as part of its ongoing energy security partnership, Pyatt said.

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