One of the largest energy companies in the United States is facing increasing pressure to cease its activities in Russia. This comes after the Biden administration instituted significant new sanctions targeting Russia’s oil sector.
U.S. Congress members Lloyd Doggett and Jake Auchincloss have urged SLB, previously known as Schlumberger, to withdraw from Russia to avoid violating U.S. sanctions. Their remarks followed a recent announcement from the Biden administration that prohibits American petroleum services from being offered to entities in Russia, effective from February 27.
SLB, the world’s largest oilfield services provider, is among the few American oil firms still active in Russia since the country’s full-scale invasion of Ukraine in February 2022. Unlike SLB, its top competitors, Baker Hughes and Halliburton, exited the Russian market in 2022, leaving behind their operations to local managers.
An investigation revealed that SLB has signed new contracts, advertised for numerous job openings, and brought equipment into Russia, even as its rivals pulled out. As the conflict in Ukraine continues, lawmakers are concerned about Western companies like SLB contributing to Russia’s energy capabilities.
SLB did not respond to requests for comments on the new sanctions but stated on its website that it prioritizes compliance with export controls and sanctions, asserting its commitment to meet international laws.
While the U.S. Treasury’s new directive did not directly name SLB or its Russian subsidiary, legal experts believe the order raises the stakes for the company if it continues operating in Russia. According to Doggett, any reasonable interpretation suggests that U.S. oilfield services firms should exit Russia to comply with the rules.
A Treasury spokesperson stated that the new prohibition bars all U.S. entities from providing petroleum services to anyone in Russia. Earlier in October, a bipartisan group of over 50 Congress members requested tougher sanctions against U.S. oilfield services firms in Russia, alleging that SLB’s operations support the Russian military efforts.
Oilfield service providers perform critical work in the oil and gas sector, including building infrastructure and providing advanced technology essential for resource extraction. Although Western leaders have been hesitant to impose broad sanctions on oilfield services, the Biden administration’s recent comments indicate that oil markets might be oversupplied by 2025, thus reducing risks in the Russian oil trade.
An attorney noted that the new sanctions effectively make the provision of oilfield services in Russia illegal under U.S. law, heightening the risks for SLB’s operations in the country.
Craig Kennedy, a Russia analyst from Harvard, indicated that the Treasury’s new sanctions seem specifically directed at SLB, and navigating them could prove perilous for the company. If compelled to leave Russia, SLB’s departure would significantly impact the Russian oil sector, which relies heavily on advanced Western technologies.
Historically, SLB has encountered issues with U.S. sanctions; in 2015, the company admitted guilt in a federal case and paid over $232 million for facilitating trade with both Iran and Sudan.