By Maria Gallucci - Western sanctions against Russia’s energy sector are forcing another U.S. oil company to pull its workers from a Russian project. Schlumberger (NYSE:SLB)., the world’s biggest oilfield services provider, said it will withdraw workers who are citizens of the United States and European Union, Bloomberg News reported Tuesday.
The Texas-based company will pull out about 20 mid-level and senior managers, according to two people who asked not to be identified, Bloomberg said. The news comes a day after U.S. oil giant Exxon Mobil Corporation (NYSE:XOM) said it is withdrawing from a joint project with Russia’s state-owned Rosneft (MCX:ROSN) for offshore Arctic drilling because of the sanctions.
Exploration and production companies were expected to spend nearly $52 billion in Russia this year, according to estimates from Barclays PLC and cited by Bloomberg. A large chunk of that money goes to Schlumberger and other service and equipment companies.
The U.S. and EU first targeted Russia’s energy sector in July by banning Western companies from exporting advanced oil technologies to Russia. The country relies heavily on Western aid and expertise to carry out projects in two of its prized sectors: deep-water and Arctic drilling, and shale gas exploration. The sanctions ramped up in August, prohibiting American and European energy companies from working with Russia on future oil and gas developments.
Last month, Schlumberger became the first U.S. energy firm to say that its quarterly earnings will be negatively impacted by the sanctions, Reuters noted.
Schlumberger develops and provides technology for hydraulic fracturing, or fracking, which involves blasting open shale rock with a mix of water, chemicals and sand to free up oil and gas deposits. Russia relies on fracking for about one-quarter of its oil production, and replacing technology developed by Schlumberger and firms like Halliburton Co. requires “colossal funds,” said Vagit Alekperov, chief executive of Russia’s OAO Lukoil, Bloomberg reported.
Schlumberger gets about 5 percent of its annual revenue from Russia, which amounts to about $2.2 billion, Reuters reported.