Lame ducks quacks to impose most stringent sanctions on Russian energy sector

Two Russian oil companies, Gazprom Neft and Surgutneftegaz, as long as their subsidiaries, have fallen under USA's new blocking sanctions.

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Sanctions

The new restrictions will affect Gazprom Neft's oil refineries (Moscow, Omsk) and its foreign structures in Tajikistan and Serbia. In addition to them, the new sanctions list also includes Ingosstrakh and AlfaStrakhovanie insurance companies for insuring ships that transport Russian raw materials.

The new sanctions list also includes the head of Zarubezhneft Sergey Kudryashov and the head of Gazprom Neft Alexander Dyukov, deputy energy ministers of the Russian Federation Roman Marshavin and Eduard Sheremetsev, President of Lukoil and general director of Tatneft, Rosatom CEO Alexey Likhachev, CEOs of Bashneft and Zarubezhneft Vladimir Chernov and Sergey Kudryashov, as well as the son of Lukoil co-owner Yusuf Alekperov.

The US has imposed sanctions on Gazprom LNG Portovaya and Gazprom Shelfproekt, Achimgaz, Rusgazburenia, the Gazprom and Lukoil joint venture Lajavozhneftegaz, the Serbian company NIS, Polar Lithium, and Vostok Oil. In addition to them, restrictions were imposed on structures associated with the Russian Arctic LNG-2 project.

In addition, the US Treasury imposed sanctions against 100 vessels involved in the transportation of Russian hydrocarbons and more than 30 Russian oilfield service companies, including RN-Burenie and OFS Technologies.

The new sanctions will exclude the participation of Russian companies in the management of Serbia's oil and gas company Naftne industrije Srbije (NIS), which is controlled by Gazprom structures. The new sanctions may trigger interruptions in oil supplies, problems in the operation of oil refineries and petrochemical plants.

According to experts interviewed by Reuters, the new measures of the Biden administration will lead to serious interruptions in the supply of resources to India and China. The sanctions may cause the prices for Russian raw materials to fall below the price cap level. Indian refineries may refrain from accepting the sanctioned ships.

Russian securities rise in value as US imposes new sanctions

The Gazprom Neft press service told RBC that the company had been "preparing for various negative sanctions scenarios” for the past two years. Gazprom Neft has been under unilateral foreign sanctions since 2022.

"The company will continue to operate while maintaining business stability,” Gazprom Neft assured.

In addition, the United States has banned American companies from providing oilfield services in Russia since February 27.

Sanctions have also been imposed on 183 vessels that are part of the shadow fleet for transporting oil. The vessel fly the flags of Russia, Panama, Barbados, and Gabon. They are not only oil tankers, but also passenger ships, supply vessels, etc.

The restrictions have affected several foreign traders that supplied Russian oil — such companies are registered in the UAE, Hong Kong, and other countries.

The White House called the new sanctions the most significant restrictions imposed on the Russian energy sector. The US Treasury will also cancel the provision that exempted energy payment intermediaries from sanctions imposed on Russian banks.

Gazprom Neft's quotes immediately gained more than 5%, reaching ₽620 per share at the peak of trading.

Details

Gazprom Neft (formerly Sibneft, Russian: Сибнефть) is the third largest oil producer in Russia and ranked third according to refining throughput. It is a subsidiary of Gazprom, which owns about 96% of its shares. The company is registered and headquartered in St. Petersburg after central offices were relocated from Moscow in 2011. By the end of 2012 Gazprom Neft accounted for 10% of oil and gas production and 14.6% of refining activities in Russia. Production volumes in 2012 increased by 4.3% in comparison with 2011, refining throughput grew by 7%, revenue was up 19.5% with EBITDA and net profit advancing by 7.7% and 9.9% accordingly.

Surgutneftegas is a Russian oil and gas company created by merging several previously state-owned companies owning large oil and gas reserves in Western Siberia. The company's headquarters are located in Surgut, Khanty-Mansi Autonomous Okrug. In the 2020 Forbes Global 2000, Surgutneftgas was ranked as the 251st -largest public company in the world. Surgutneftegas includes a large oil refinery in Kirishi, Leningrad Oblast, operated by the Kirishinefteorgsintez subsidiary. The company is also engaged in fuel retail activities in north-west Russia by cooperating with the Petersburg Fuel Company. Surgutneftegas is also a shareholder of Oneximbank (Объединённый экспортно-импортный банк). From the beginning Surgutneftegas has been led by president and director general Vladimir Bogdanov, who had run the Surgut oil fields since 1983. According to Stanislav Belkovsky, Vladimir Putin is the beneficial owner of Surguneftegas.