Last Friday, ten days before the end of his official term in office, the administration of US President Joe Biden introduced another package of sanctions against the Russian energy sector, focusing on oil exports. Experts consider them the “toughest sanctions” since the beginning of the war that Moscow has been waging against Ukraine since 2014.

“Ukrainian Energy” has delved into the most significant details of the new sanctions, their consequences for the Kremlin’s war economy and how Western countries are strengthening cooperation to protect businesses from Russian influence.

Special sanctions

The new sanctions against Moscow were announced by Washington at the end of December last year. And already on January 10, the US Treasury Department announced restrictions on a number of companies and officials, the vast majority of whom turned out to be connected to the Russian oil and gas sector.

In particular, the US has for the first time imposed sanctions against the two largest Russian oil companies - Gazpromneft and Surgutneftegaz, as well as existing Russian projects for the production of liquefied natural gas (LNG): Portovaya LNG, owned by the state monopoly Gazprom, and the Cryogaz-Vysotsk plant of the Novatek corporation, controlled by Kremlin oligarchs Gennady Timchenko and Alexander Mikhelson.

The full list of restrictive measures, companies and individuals is contained in the list of specially designated citizens and blocked persons (SDN - Specially Designated Nationals and Blocked Persons List).

Inclusion on the SDN list effectively means isolation - all assets and accounts in dollars are blocked from companies, and this cuts them off from the American financial system, through which a significant part of international payments pass. In addition, any third-country individuals or companies that dare to interact with the Russian oil and gas sector may now be subject to US sanctions.

The main goal of such American efforts is to reduce the Kremlin's revenues from oil and gas exports, which are mainly directed to India and China.

From now on, buyers of Russian hydrocarbons from these countries cannot conclude deals with Gazpromneft and Surgutneftegaz, otherwise they risk being punished by the US authorities and falling under secondary sanctions. However, it is noteworthy that the Russian state-owned company Rosneft, which is the main supplier of Russian hydrocarbons to China and India, is not on the new SDN list.

At the same time, the US Treasury Department has added several dozen oil service companies (these are companies that drill and service wells - that is, production directly depends on them), more than 160 tankers of the "shadow fleet", as well as the companies "Ingosstrakh" and "Alfastrakh" that provide insurance for tanker transportation.

Hunting for traders

In general, the US "black list" already includes 270 tankers of the "shadow fleet" that transport Russian oil.

According to the Bloomberg news agency, this is twice as many as all the vessels that were previously included in the sanctions lists of the US, Great Britain and the European Union. About 30 tankers subject to Washington's sanctions were previously included in the lists of London and Brussels. "However, it is the American measures that Asian buyers are wary of violating," Bloomberg notes.

Today, citing a senior Indian official, the agency reported the country's intention to stop buying Russian crude from tankers hit by US sanctions. This was "another example of the impact that Washington's measures are having on the global oil market."

The US Treasury Department also imposed sanctions on the businesses of "opaque traders" trading Russian oil. "They are often registered in high-risk jurisdictions, have opaque corporate structures and personnel linked to Russia, and hide their commercial activities," the finance department said in a statement.

Many of these trading companies were created only after Russia's full-scale war against Ukraine began. "Actions against such traders are likely to cause temporary disruptions in the oil market, but most of them are likely to return to the market under different names," Reuters notes.

Serbian market under the gun

The latest sanctions of the US Treasury Department were also notable for the fact that, together with Gazpromneft, which is part of the Russian state monopoly Gazprom, its subsidiary in Serbia, the Oil Industry of Serbia (Naftna Industrija Srbije, NIS), was added to the SDN list.

As reported by Ukrainian Energy, Serbian President Aleksandar Vučić, known for his pro-Russian views, was wary of such a development in December last year.

In the ownership structure of NIS, Gazpromneft controls 51% of the capital, Gazprom - 5.15%. "The only conditions acceptable to the US for the operation of the Serbian energy company NIS are to reduce the share of Russian owners in the company to zero," said US Assistant Secretary of State for European and Eurasian Affairs James O'Brien.

According to Aleksandar Vučić, the US insists on the complete withdrawal of Russian capital from NIS within 45 days, i.e. by February 25.

To achieve this goal, the Serbian authorities expect to buy back shares of Gazpromneft and Gazprom for 600-800 million euros. “We have that kind of money,” Aleksandar Vučić assured. But he wonders who will benefit if Russia receives these funds right now, when the Putin regime continues the war in Ukraine. “We need to know exactly the US conditions, and then we will be able to talk to the Russian side,” the Serbian leader said, announcing the next round of talks in the Kremlin.

Biden’s “pass” to Trump

It is worth noting that the US, EU, UK and other Western countries have been consistently imposing sanctions on Russian oil and gas companies since 2014, after Moscow annexed Crimea in violation of international law. For this reason, for example, the American corporation Exxon was forced to withdraw from projects on the Arctic shelf with Rosneft.

Over the years of Putin’s war against Ukraine, the Russian economy has deteriorated significantly. “The reality is that its financial fundamentals are increasingly resembling a house of cards. Time is not on Putin’s side. He is sitting on a financial time bomb of his own making,” wrote a recent article by The Financial Times columnist Martin Sandbu.

Andriy Kobolev, former head of the National Joint-Stock Company Naftogaz of Ukraine, is cautious about the prospects for US anti-Russian sanctions. He notes that the measures taken by the Joe Biden administration against Russian energy “look very tough on paper, but the question is how they will be implemented in practice.”

“It is noteworthy that this sanctions package includes almost everything that the Biden administration has called “unacceptable escalation” over the past three years. As we see now, this was not true. They were not afraid of an escalation of the conflict with Moscow, but of a rise in prices for domestic consumers in the US, which would make it difficult to maintain power in the White House,” the expert noted.

Despite everything, the largest sanctions imposed by the West against Russia could play a role in putting pressure on the Kremlin to persuade it to stop the war in Ukraine. “How the newly elected US President Donald Trump uses this “pass” in the process of negotiations with the Kremlin will become a litmus test for assessing the level of his desire to really put pressure on the sore points of the Russians. If he decides to lift the sanctions before starting a serious conversation with Putin, it will be a bad sign for us. And if he uses it in the negotiations, it is a very good sign,” Andrey Kobolev explained.

Pro-Ukrainian collaboration of the West

At the same time as the US, the UK has also introduced new large-scale anti-Russian sanctions in order to put more powerful and effective pressure on the Russian economy in general and on its main oil industry in particular

Also, the allies are making efforts to improve sanctions policy and coordinate actions to prevent Russian companies from accessing Western markets. This is evidenced, in particular, by the search for specialists of the appropriate profile in the British Ministry of Defense, in whose staff a vacancy for an economic adviser on Russia and sanctions issues recently appeared.

The description of this position on the LinkedIn social network states that this “key role” will allow “to have a real impact” on the creation of a completely new direction of the UK’s defense policy. The search for such a specialist is due to “the increasing use of economic leverage by hostile states to undermine national security.” “The conflict in Ukraine has highlighted the importance and urgency of the economic sphere,” the Ministry of Defense notes.

They expect that the new employee will understand the specifics of Russian-Ukrainian relations, be able to quickly achieve results and generate ideas in conditions of uncertainty, “counter economic threats” and “identify security risks” associated with foreign investments and supply chains for British companies.

It is worth noting that in the event of a successful interview, the candidate will strengthen the team of the Directorate of Economic Security and Diplomacy, which “will work closely with other government departments, including the intelligence community of Great Britain and allied countries, especially the United States.”

Therefore, there is reason to expect that violating sanctions will be constantly more difficult for Russia and the price of the war against Ukraine for the Putin regime will increase even more.

Svitlana Dolinchuk, specially for “Ukrainian Energy”

Tags:USA