08 September 2014, News Wires – Rosneft is reported to be among a trio of Russian state-owned oil players being targeted for fresh European Union sanctions that would hit their ability to raise funds in Western capital markets.
The new measures would prevent oil giant Rosneft, Gazprom’s oil producing unit Gazprom Neft and pipeline operator Transneft from raising new bank loans in the EU of longer than 30 days’ maturity, according to documents obtained by the Wall Street Journal.
The move is expected to be implemented on Tuesday under a widening of existing sanctions imposed by the EU over Russia’s alleged provision of military backing for pro-Russian separatists in eastern Ukraine.
It would further constrain the ability of Rosneft to raise vital funding for upstream projects, with the state-owned oil company reported to be in line for a $40 billion-plus handoutfrom the Kremlin to tackle its financing challenges.
The documents show the EU seeking to hit Russian oil companies, but leaving unscathed those such as state-run Gazprom involved in gas production and export, which are critical to many European countries’ energy supplies.
They also make some exceptions for exports destined for the Russian space and civilian nuclear industries.
An EU diplomat told Reuters the sanctions would apply to companies with turnover of more than 1 trillion roubles ($26.95 billion), of which half is generated from the sale or transport of oil.
The EU has already barred exports of technology and equipment to Russia for use in deep-water exploration and production, as well as exploitation of hydrocarbon resources in Arctic and onshore shale plays, under existing sanctions that have also hit the banking sector.
The latest measures would bar new service contracts being signed in these three upstream areas, as well as further reduce the maximum loan term for five Russian state-controlled banks – including Sberbank and VTB Bank – to only 30 days from the existing limit of 90 days under current sanctions.
European leaders said late last week the new measures could be lifted if there was clear evidence that Moscow was helping forge a genuine political solution in Ukraine.
According to an EU spokeswoman, that evidence would need to include permanent monitoring of the Russia-Ukrainian border, the withdrawal of illegal armed groups from Ukraine and of Russian forces illegally operating on Ukrainian territory.
However, Russia’s Prime Minister Dmitry Medvedev was quoted as saying by Reuters that Moscow would respond “asymmetrically” to any new EU sanctions on the energy and finance sectors, possibly by barring Western flights from Russian airspace.
The country has already barred food imports from the EU, US, Canada and Norway in retaliation for the previous sanctions imposed at the end of July.
Medvedev dubbed such sanctions “stupid” and warned that Russia would be less patient in responding to what he termed “the temptation to use force in international relations” by Western countries.
Meanwhile, a fragile ceasefire in eastern Ukraine put in place at the weekend appeared to be crumbling as there were reports of fresh shelling in Mariupol and near Donetsk airport.