A formidable bipartisan alliance in Congress is vociferously urging the Biden administration to ramp up sanctions against the oilfield services sector in Russia. Their insistence stems from allegations that the existing regulations are, quite alarmingly, permitting a prominent American corporation to unwittingly fuel Vladimir Putin’s military ambitions.
Simultaneously, they have called upon the Treasury and State departments to elucidate whether they sanctioned a series of transactions conducted by the Houston-based SLB—historically recognized by its former moniker, Schlumberger—wherein equipment valued at a staggering $17.5 million was imported into Russia between August and December of the previous year. As the world’s premier oilfield services enterprise, this raises profound questions.
These congressional demands were ignited by an August exposé from the Financial Times, detailing how SLB has audaciously expanded its operations within Russia, seizing opportunities created by the withdrawal of its Western competitors, all while international sanctions were invoked in response to Russia’s invasion of Ukraine.
“This U.S.-based entity is crucially sustaining Vladimir Putin’s war apparatus with financial backing for his egregious invasion of Ukraine,” lamented the coalition in a compelling missive addressed to Secretary of State Antony Blinken and Treasury Secretary Janet Yellen, one that bore the signatures of over 50 Congressional members.
“We implore you to bolster our support for Ukrainian allies by pursuing more stringent oil sanctions that would effectively curtail Putin’s financial windfalls,” they pressed, drawing a clear line in the sand.
Responses from both representatives of the State Department and SLB have been conspicuously absent, leaving the air thick with speculation. However, a spokesperson from the Treasury reassured stakeholders that they remain “dedicated to utilizing every available tool to diminish the Kremlin’s revenue streams and impede operations of its war machine.”
“American firms are barred from undertaking new investments in Russia, and we are resolute in enforcing all applicable sanctions against enterprises under our jurisdiction,” the Treasury’s statement emphasized.
Oilfield service providers are the backbone of the global oil and gas sector—engaging in a multitude of tasks ranging from road construction and pipeline installation to drilling and crude oil extraction. They offer critical access to advanced technologies essential for navigating the complexities of exploratory and developmental drilling operations.
Humanitarian organizations and Ukraine’s government have openly accused SLB of facilitating the generation of substantial oil revenues, which ultimately bolster the Kremlin’s war efforts. Indicatively, Ukraine’s National Agency for Corruption Prevention has placed SLB on its notorious “international sponsor of war” blacklist.
Yet, Western policymakers have hesitated to implement sweeping sanctions on the oilfield services sector in Russia, fearing that doing so might constrict fossil fuel exports and provoke a drastic spike in global oil prices.
Since December 2023, SLB has unfurled over 1,300 job listings in Russia, culminating in postings as recently as this week. One such listing for a computer technician in Tumen, dated October 15, asserted, “We are an international company and are currently in an active phase of team expansion.”
Rep. Lloyd Doggett, a Texas Democrat, poignantly declared that by allowing American enterprises to operate in Russia, the U.S. government and its European allies are essentially “funding both sides of the war.”
“While fully cognizant of the inflationary pressures on gasoline prices, we must staunch the flow of resources empowering Putin’s war machine if we are to secure victory, maintain a just peace, and advocate for reparations,” he contended.
Echoing this sentiment, Jacob Auchincloss, a congressman from Massachusetts, argued that closing sanctions loopholes, which U.S. oilfield services companies are currently exploiting, would inevitably raise the costs associated with oil extraction in Russia, yet it is improbable that global supply would feel the pinch.
In May, a State Department official articulated that SLB had, “thus far,” not contravened sanctions, asserting that the company was well aware of “where the guardrails” lay.
The Congressional correspondence cast doubt on whether this assessment still holds. It inquired of the Treasury and State departments, “What exceptions to the current sanctions regime has SLB utilized?”
SLB has maintained its intent to continue operations in Russia, claiming to respect sanctions while disputing allegations of growth within its Russian portfolio.
On Friday, SLB reported a noteworthy 13 percent surge in third-quarter earnings, surpassing analysts’ forecasts.
The company has faced its share of sanctions-related controversies previously. In 2015, it admitted guilt to a federal charge, shelling out $232 million for facilitating trade with Iran and Sudan. Furthermore, in 2021, SLB’s U.S.-based subsidiary, Cameron International Corporation, settled for $1.4 million with the Treasury Department’s sanctions enforcement unit for “apparent violations” tied to services provided to the Russian energy titan Gazprom-Neft Shelf for an Arctic offshore oil initiative.
“Given SLB’s extensive business engagements in Russia, it is hardly surprising that Congressional members are probing the sanctions framework,” remarked Jeremy Paner, a sanctions compliance expert at Squire Patton Boggs.
“While SLB is permitted to sustain its operations in Russia under U.S. law, they are prohibited from importing new technology or expanding their endeavors without courting violations of sanctions,” he elaborated. “Maintaining a ringfenced operation is an arduous task; even a single email transmitted from their Houston headquarters to Moscow carries legal repercussions.”