Schlumberger withdraws its managers from Russia

Economic sanctions - sign
Source: DollarPhotoClub

Schlumberger, the biggest oilfield services provider, has decided to move employees who are U.S. or EU citizens, out of Russia – Bloomberg reports. About 20 mid-level and senior managers will be affected by the decision.

Reducing the activity of Western companies in Russia is the effect of sanctions in response to the annexation of the Crimea and Moscow stoking tensions in the east of Ukraine. Introduced in August, the EU and American sanctions introduced a ban on the sale of equipment and selling of technology for the extraction of crude oil.

Schlumberger is the second company after ExxonMobil, which has decided to limit their involvement in the exploration work in Russia. According to the spokesman for the Russian branch of Schlumberger, Alexander Borisov, the company closely monitors the sanctions and restrictions imposed by the USA and the EU, and continue to take all necessary steps to ensure compliance with applicable laws.

Restricting access to Western technologies, including hydraulic fracturing, may have serious repercussions for Russian companies. Russia uses fracking to extract up to 25 per cent of the total volume of its oil production. The CEO of Lukoil, Vagit Alekperov, acknowledged that replacing technologies provided by companies such as Schlumberger would require enormous investment.

Only this year, exploration companies in Russia planned to spend up to 51.7 billion on exploration and production of hydrocarbons. A large part of the spending would go to service and equipment companies such as Schlumberger and Halliburton Co.

Alexei Kokin, oil and gas analyst at UralSib Financial Corp, pointed out that restrictions on technology transfer can become a serious problem for Russian companies. “If Schlumberger and others scale down involvement in the Russian oil sector, the impact on output could start to be felt within months, maybe cutting output by 1 percent next year,” he said.

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