Russia’s invasion of Ukraine sent Brent Crude oil beyond $100 for the 1st time since 2014 and drove up European gas prices, while the UK is imposing sanctions in response to the attack.
The UK Government has already outlined its 1st tranche of sanctions targeting Russian banks and individuals, aimed at pushing Russia out the Western financial markets.
Meanwhile, Prime Minister Boris Johnson said another «massive package of sanctions» would be put in place to «hobble Russian economy».
Alex Kemp, petroleum economist at Aberdeen University, said:
- One of BP’s biggest investments is a substantial share in Rosneft, the Russian oil company
- That’s one of its biggest investments
- The market will be thinking there is a problem there, because if western governments impose sanctions then the Russian government may take retaliatory measures – the market thinks there is some risk attached to a very big investment in Russian oil & gas
- Investors are worried that sanctions will be expanded to target the energy sector and this will clearly hurt BP if Rosneft is captured by them
- However the impact is offset slightly by the surge in crude and gas prices
French-headquartered TotalEnergies owns 19% of Novatek, Russia’s largest LNG firm.
Wintershall DEA, Europe’s largest independent exploration & production firm, cancelled a press conference on its annual results this morning due to the situation in Ukraine.
The UK is only a small portion of the Wintershall DEA business, however Russian Gazprom is involved in its Sillimanite field on the UK-Dutch border.
Another North Sea company with links to Gazprom is IOG, which is working towards 1st gas for its flagship Saturn Banks development in the North Sea.
IOG signed a deal in July to sell gas from Saturn Banks to Gazprom Marketing & Trading, a London-listed subsidiary of the Russian firm.
The UK is not reliant on Russia for its gas, however the GMB Union said energy security remains a key issue supporting the need for new oil & gas fields.
GMB National Secretary, Andy Prendergast, said:
- No politician should rule out new fields – we’d be cutting our nose off to spite our face to get to net zero by relying on Russian and Qatari gas
- As we all know, net zero doesn’t actually mean zero carbon – the UK will still be using oil & gas in 2050 under all the projections