Page 5 - FSUOGM Week 27 2022

FSUOGM COMMENTARY FSUOGM

Platform stationed at
the Sakhalin-2 project.

in the Kremlin’s crosshairs. It is worth looking Ukraine, while also depriving Europe of oil it can
at whatever foreign-held oil and gas assets could use to displace Russian supply. But the Kazakh
be seized. government has not accused Moscow of inten-
tionally disrupting transit.
Exposures By seizing Chevron’s 15% stake in CPC, the
The largest foreign investor by far in Russian share of Russia and Russian-owned entities in
oil is BP, which has a 19.75% stake in nation- the pipeline would increase to over 50%, which
al oil company (NOC) Rosneft, which it has in theory could give it greater room to disrupt
said it will withdraw from. Rosneft accounted supply. However, it seems doubtful that Russia
for roughly a third of BP’s overall hydrocarbon would risk such substantial damage to its rela-
output last year, and so the decision will weigh tionship with Kazakhstan by making such a
heavily on the company’s overall business. BP move.
notably wrote down the value of its sharehold- Italy’s Eni, meanwhile, has a 50% stake in the
ing in Rosneft to zero and took a $25.5bn pre- Gazprom-controlled Blue Stream pipeline that
tax impairment on its Russian assets at the end flows Russian gas under the Black Sea to Turkey,
of March. although there may not be much tactical advan-
ExxonMobil, meanwhile, owns half of the tage in the Kremlin’s seizing this asset.
Sakhalin-1 project, in partnership with Rosneft TotalEnergies is among the major foreign
and Indian investors. It used to have a larger players in the Russian oil industry, but given that
business in Russia, but exited several joint it has said it will not withdraw from the country
ventures in the wake of Russia’s annexation of but will only cease investments in new projects,
Crimea in 2014 and subsequent Western sanc- its stake in Novatek’s Yamal LNG plant may be
tions. Given what has happened at Sakhalin-2, secure. That said, the same cannot be said of its
and the intense confrontation between Russia position at Arctic LNG-2, as the French major’s
and the US over Ukraine, the risk that this pro- decision to suspend new investments in Rus-
ject too may be seized is very real. sia could affect that project. Moscow would be
Chevron has no upstream presence in Rus- unlikely to seize the project in the same way it
sia, but it has a 15% stake in the Caspian Pipe- has done at Sakhalin-1, given the involvement of
line Consortium (CPC) oil system that pumps Chinese oil companies, but it may well deem it
Kazakh crude to a terminal on Russia’s Black Sea necessary to force out TotalEnergies, in order to
coast. Kazakhstan has already reported disrup- recruit a more willing financier.
tions in oil transit flow via Russia since the war Austria’s OMV and Germany’s Wintershall
began, but this has been attributed to a storm that Dea have ruled out leaving Russia, meaning that
damaged the terminal in March, and in June, their positions at major gas fields in Western
Russia launched a search for World War II mines Siberia should be safe for the time being. How-
in the waters surrounding the facility. ever, both have also pledged to cease investment
The timing of this search has fuelled specu- in new projects, which could put their positions
lation that Russia is seeking to punish Kazakh- at jeopardy if additional investments are called
stan for withholding support for the invasion of for to sustain production at their fields. ™

Week 27 07•July•2022 www. NEWSBASE .com P5