The newest US economic sanctions against Russia are ones that Vladimir Putin is finally going to notice, as they directly target the Russian oil and gas industry.
New U.S. sanctions handed down on Friday are designed to effectively "shut off" Russian oil conglomerates from oil exploration projects, U.S. officials said, in a move aimed squarely at Russia's $425 billion-a-year petroleum industry.
The measures are "designed to effectively shut down this type of oil exploration and production activity by depriving these Russian companies of the goods, technology, and services that they need to do this work," a senior Obama administration official said Friday.
The official added the intention of the new sanctions was to ensure that "we have effectively shut off the capacity" of Russian oil companies to draw on U.S. expertise for deepwater, Arctic offshore, and/or shale oil exploration projects. The official stressed this was an important step because Russia's companies did not possess the kind of technology needed to undertake the operations.
The new sanctions prohibit U.S. companies from exporting goods, services, or technology to support five Russian energy companies in exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil. The U.S. Treasury Department said companies have until Sept. 26 to wind down existing transactions affected by the new sanctions.
The Russian energy companies hit by the sanctions include Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft. European companies will have similar prohibitions, under mirroring sanctions handed down by the European Union.
Let's stop and think. US companies can no longer partner with Russia for oil exploration in the Arctic and offshore. But I thought Obama was in the pocket of Big Energy?
Mark Dubowitz, the executive director of the Foundation for Defense of Democracies and an expert on previous sanctions leveled against countries like Iran, told Business Insider it was a smart escalation in sanctions.
"The new sanctions are smart and targeted and will impact Russia's access to Western technology and services that are needed to develop Moscow's medium to long-term oil exploration and production capacity," Dubowitz said.
"There will be winners and losers, including companies like Exxon and BP, but Western companies will adjust as they have to past energy sanctions against countries like Iran, Iraq, Sudan, and others. The real pain will be borne by Moscow, for whom energy is their economic lifeblood."
It's going to hurt Moscow, definitely. But it's going to hurt the big US oil giants too. I'm all for that, frankly.
Well played, Mr. Obama.