28th Apr 2014 14:36
LONDON (Alliance News) - Planned US and EU sanctions against Russia as part of the ongoing Ukraine crisis could hit BP PLC, Royal Dutch Shell PLC and Centrica PLC as a result of their links to Rosneft OAO and Gazprom OAO.
US President Obama confirmed on Monday in Manila that the US is "moving forward with an expanded list of individuals and companies that will be affected by sanctions."
The White House said today that the Treasury Department is imposing sanctions on seven Russian government officials, including two members of President Vladimir Putin's inner circle, who will be subject to asset freezes and US visa bans.
It added that seventeen companies linked to Putin's inner circle will be subject to an asset freeze while the Commerce Department is imposing additional restrictions on 13 of those companies.
In addition, the EU is adding 15 names to a list of individuals hit by travel bans and asset freezes in response to Russia's actions in Ukraine, according to diplomats on Monday.
Among those expected to be on the US sanctions list according to multiple media outlets, are the head of the state-run major oil company Rosneft and the world's largest extractor of natural gas, Gazprom OAO.
This news is particularly bad for BP, which owns 19.75% of Rosneft's shares under a deal reached in 2012. If the sanctions hit its Chief Executive, Igor Sechin, it is unclear what would happen for BP's operations in Russia and the US.
Earlier in April, BP's Chief Executive Robert Dudley said at the company's annual general meeting that the company could play an important role as a bridge between Russia and the West, stating that the company will seek to pursue its business activities, mindful that the mutual dependence between Russia, as an energy supplier, and Europe, as an energy consumer has been an important source of security and engagement for both parties for many decades.
Dudley added at the time that the company has a unique position with Rosneft in Russia, a position that gives it nearly a fifth of the world's largest publicly traded oil company operating in a country with massive reserves and massive potential.
A spokesman for BP said on Monday that the company is, "committed to our investment in Rosneft, and we intend to remain a successful, long term investor in Russia. We are considering today?s announcement to see specifically what this may mean for BP. We will of course comply with all relevant sanctions."
According to media reports, the US Treasury is eyeing up sanctions against Gazprombank, the financial arm of gas major Gazprom. This could have a big impact on Shell, which has joint operations with Gazprom at Sakhalin Island and in the Arctic.
Centrica could also be hit, as it is currently launching a three-year gas supply deal with Gazprom for 7% of supplies from its subsidiary, British Gas.
Shell and Centrica could not immediately make a comment on the ongoing sanctions.
The sanctions relate to the ongoing crisis in Ukraine, which erupted at the end of February with the ouster of pro-Russian Ukrainian president Viktor Yanukovych after three months of protests. Crimea voted in March in a disputed referendum to leave Ukraine and join Russia, after which pro-Russian separatists seized government buildings in the east, where Ukraine's ethnic Russian minority is concentrated.
The capture of seven observers from Vienna-based OSCE, of which Russia is a member, prompted the G7 major world economies to announce they would impose new sanctions on Russia over its alleged support of militant separatists.
On Saturday, Russia's envoy to the OSCE Andrei Kelin said Moscow would help secure the release of the observers.
Centrica shares were trading flat at 332.60 pence, Shell shares were also trading flat at 2,249.00 pence and BP shares were trading 1.5% lower at 486.15 pence, putting it in the top FTSE 100 fallers Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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