EU sanctions BACKFIRE as Putin holds western firms hostage in Russian oil projects

Russian state TV host taunts Europe over high gas and oil prices

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Since Vladimir Putin ordered Russian forces to invade Ukraine on February 24, western powers including the UK, US and EU has joined forces to issue tough sanctions on Moscow. But now, the Kremlin has escalated the stand-off by banning investors from the so-called unfriendly countries from selling shares in key energy projects and banks until the end of the year.

Putin has retaliated against sanctions by Western countries and its allies like Japan, by imposing roadblocks for western firms trying to leave Russia, even seizing their assets in some cases.

The Russian leader signed and published a decree yesterday that immediately banned investors from countries which supported sanctions on Russia from selling their assets in a range of different partnerships.

These include production sharing agreements (PSA), banks, strategic entities, companies producing energy equipment, as well as in other projects, from oil and gas production to coal and nickel.

According to the decree, Putin could allow some exit deals to go ahead by issuing a special waiver, and the government and the central bank should prepare a list of banks for the Kremlin’s approval.

This decree is a major blow as it prevents foreign investors from nearly every major financial and energy projects from selling their stakes, including the Sakhalin-1 oil and gas project.

On Thursday, Rosneft, a Russian state owned oil company, blamed US giant Exxon Mobil for falling output at the Sakhalin-1 oil fields, after the company announced that would be transferring its 30 percent stake “to another party.”

Rosneft noted that since May 6, no oil tankers have left the De Kastri sea terminal in the far East oil projects.

It also added that over the past few months, Sakhalin-1 has hardly produced any oil.

Rosneft said: “As of now, De Kastri reservoirs are 95% full, oil is not being offloaded (for exports),” adding that it had no information about Exxon’s stake transfer.

Last month, the Kremlin announced that as a result of the sanctions imposed on Russia, that oil production at Sakhalin-1 had fallen to just 10,000 barrels per day (bpd) from 220,000 bpd.

Over the past year, Western countries have accused Putin of weaponising his control of EU’s energy supplies in order to exert political pressure.

The fuel-starved Europe is heavily dependent on Russian oil and gas, accounting for 40 percent of its imports in 2021.

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Even over the past month, Moscow has tightened its grip on gas flowing into Europe, with many fearing a complete cut-off by this winter.

Earlier this year, Putin has put out an order demanding “unfriendly” countries pay for gas in roubles set up by a Russian bank.

Russia has currently cut off gas supplies to Poland, Bulgaria, Finland, Denmark and the Netherlands for refusing to pay in roubles.

Most recently, Russia cut off Latvia from its supply for allegedly breaking a contract with Russian gas behemoth Gazprom.

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