The acquisition of a 51% stake in Russia’s Eurasia Drilling Co (EDC) by US oilfield services giant Schlumberger “has big problems” in the current political situation, the head of Russia’s competition watchdog said yesterday (16 August).
Schlumberger applied to the watchdog for approval to buy the stake in late July in a deal which is widely seen as testing the state of relations between Russia and the United States.
“I think this deal (with Schlumberger) will have big problems,” Igor Artemyev, the head of Russia’s Federal Anti-Monopoly Service (FAS), told reporters.
No one at Schlumberger was immediately available for comment.
On 2 August, US President Donald Trump grudgingly signed into law new sanctions against Russia, a move Moscow said amounted to a full-scale trade war and an end to hopes for better ties with the Trump Administration.
The bill includes sanctions on foreign companies investing in or helping Russian energy exploration, although the president could waive those sanctions.
The bill, which has angered the EU, gives the Trump administration the option of imposing sanctions on companies helping develop Russian export pipelines, such as the Nord Stream 2 pipeline carrying natural gas to Europe, in which German companies are involved. Several other projects by European companies are also likely to be hit.
Provisions of the new sanctions put new limits on US investment in Russian companies. American companies also would be barred from participating in energy exploration projects where Russian firms have a stake of 33% or higher.
Schlumberger needs a special approval by the US Treasury, Artemyev said. “Do you believe the US Treasury will issue such an approval in the current situation?”
The deal marks Schlumberger’s second attempt to buy into EDC and the first US stake in Russia’s oil and gas industry since sanctions were imposed on Moscow after its 2014 annexation of Crimea.
In 2015 Schlumberger agreed to buy 45.65% of EDC for $1.7 billion but the deal fell through after FAS repeatedly postponed its approval.
That deal met with resistance in Russia where there were worries that Schlumberger might seize control of EDC, a senior government official said in 2015. EDC then delisted its shares on the London Stock Exchange.
“Nothing has changed since that time, plus (Russia’s) Natural Resources Ministry has taken a tough stance. There are many different and not too good (things) happening in (the) relationship for this deal,” Artemyev added.
Russia’s Natural Resources Ministry said in early August that Russia should impose “limits” on the American company in this deal because the industry was of strategic importance for Russia.
Artemyev said that Russia would give consideration to the deal but US Treasury approval was still needed.