Around 30 per cent of European gas comes from Russia and roughly half of it passes through the Ukraine Photo: REUTERS
- Firms may be forced to curtail operations as G7 powers prepare to launch new sanctions
By Ambrose Evans-Pritchard
27 April 2014
Britain’s top energy companies face an extremely delicate situation as the world’s G7 powers prepare to launch the next wave of sanctions against Russia, and may be forced to curtail operations or freeze certain commercial ties with the country.
The US, Japan, Germany, Britain, France, Italy and Canada have agreed to "intensify targeted sanctions to increase the costs of Russia's actions" – possibly as soon as Monday – unless the Kremlin takes immediate steps to defuse the crisis in Ukraine.
The G7 is for now holding back Iranian-style "stage 3" sanctions against the whole Russian banking system, mining industry, or the oil and gas nexus. This nuclear option will be deployed only if Russia escalates from black operations in Eastern Ukraine to an outright invasion, said Alastair Newton, head of political risk at Nomura.
Yet diplomats say the Obama administration has the means to choke Russia's bond market and greatly disrupt the energy sector even under limited "stage 2" sanctions, and intends to do so in a step by step escalation.
Sources in Washington say the US Treasury may soon extend the black list to Igor Sechin, president of the oil giant Rosneft, the biggest traded oil company in the world. Any such move would be a costly headache for BP, which owns 19.75pc of Rosneft’s shares under a deal reached in 2012 ending its stormy misadventures in TNK-BP.