EU sanctions on Russia's oil sector will not seriously hamper the development of new oil resources in either the short or the long term, though they leave open the possibility of further escalation if relations with Russia deteriorate in future.
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, Aug 4 (Reuters) - EU sanctions on Russia's oil sector will not seriously hamper the development of new oil resources in either the short or the long term, though they leave open the possibility of further escalation if relations with Russia deteriorate in future.
Taken as a whole, the restrictions announced on July 31 are best viewed as a piece of "sanctions theatre" designed to show the public and Washington that the EU is doing something in response to the downing of the Malaysian airliner over eastern Ukraine while keeping the costs to EU energy firms as low as possible.
Sanctions will be enforced in the form of a "prior authorisation" requirement before certain oil-related goods and services can be exported for use in Russia, according to the EU Official Journal ("Council Regulation 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine" July 31).
Restrictions apply to the "sale, supply, transfer or export" of certain technologies "suited to the oil industry for use in deep water exploration and production, Arctic oil exploration and production, or shale oil projects" (Article 3 paragraphs 1 and 3).
Covered technologies are set out in a list which consists mostly of steel pipe and casings used for the construction of pipelines and oil wells, as well as drilling and pressure pumping equipment, and some floating or semi-submersible production platforms (Annex 2).
Technical assistance, brokerage services and financing linked to the same items and technologies are subject to the same prior authorisation requirement (Article 4 paragraph 3).
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