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Energy Weapons
Sanctions Threaten Future of Siberian Shale

To hear Russia tell it, Western sanctions are a feeble attempt at cowing Moscow whose effects will barely be felt. Russia’s Energy Minister said this week that the most recent raft of sanctions, which are aimed at the country’s jointly developed projects in Arctic waters and Siberian shale deposits, will produce “no substantial” changes to the Kremlin’s energy ambitions there.

That rhetoric may be comforting for the masses, but it doesn’t capture several troubling factors for Moscow. Russia is a massive and important oil and gas producer, and it relies on the sales of these hydrocarbons for the lion’s share of its national budget. But most of this production is coming out of mature oil and gas fields that have gone into steep decline in recent years.

Moscow has been slow to embrace the unconventional drilling movement, but recently it endeavored to develop promising new shale plays in the remote Yamal Peninsula, and in offshore deposits along its thawing Arctic shore. But these projects all rely heavily on Western expertise, which is why this most recent round of U.S. and EU sanctions is focused on blocking the transfer of the technologies necessary for Russia to expand its future energy portfolio.

Reuters reports that “dozens” of new projects will have to be put on hold, as Western oil majors like Exxon Mobil find their own hopes of tapping new oil and gas reserves thwarted by the continuing standoff between Russia and Europe. Moscow insists that its forecasts remain unchanged, though the creation of a multibillion dollar fund to keep sanctions-hit companies like oil giant Rosneft afloat belies that sentiment.

Putin would prefer not to acknowledge it, but the vitality of his country’s energy future relies on Western knowledge and expertise. By picking this fight with Ukraine, he’s endangered his country’s ability to access new reserves.

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  • Duperray

    This kind of simplistic forecast is as clever as Global Warming scam is.

  • S.C. Schwarz

    Russia has money to spend and it will always be able to find western accomplices who will be will to assist them for the right price.

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