Western companies go for Russia’s unconventionals despite sanctions

While the U.S. implemented restrictive measures targeting Russia in connection with the situation in Ukraine, it did not absolutely prohibit American companies from participating in all unconventional projects.

 

Unconventional reserves include hard-to-extract resources that typically necessitate such techniques as hydraulic fracturing. In the years past, Russian oil companies looked to Western firms to supply the technology for effectively recovering unconventionals.

 

Despite the sanctions, the Norwegian multinational oil and gas company Statoil still develops Russian unconventional reserves. BP is also looking to undertake a similar project. The reason that the Western companies’ participation in Russia’s unconventional plays is not in breach of U.S. sanctions is that those Southeast Russian sites constitute limestone formations.

 

Even though American energy firms are prohibited from developing shale formation, other forms of unconventional plays are not listed in the sanctions.

 

A Rosneft representative said that the Domanik field where Statoil undertakes drilling is not a shale formation. While both are commonly referred to as “unconventional resources,” shale and limestone formations are actually different geological structures.

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