Russian Arctic oil shipping ventures to struggle as sanctions bite

Thu Nov 6, 2014 11:43am EST
 
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* Shipping sector starting to feel sanctions' bite

* Sanctions said to raise questions over planned deals

* Lenders increasingly cautious about Russian exposure

By Jonathan Saul

LONDON, Nov 6 (Reuters) - Shipping services that support Russia's attempts to extract oil from remote parts of the Arctic will run into difficulties as banks scale back energy financing due to Western sanctions, increasing transport costs for the frontier sector.

Sanctions imposed on Russia by the United States and European Union over Ukraine have targeted the delivery of oil technology, goods and services, aiming to make it impossible for Moscow to access new oil sources.

The world's largest energy exporter, Russia relies on oil and gas exports for about half its federal budget. With conventional oil fields in decline, it needs to exploit sources in remote parts of Siberia and the Arctic to keep oil flowing.

While the shipping industry has so far been broadly excluded from sanctions, industry sources say the sector is starting to feel the effects because of fears about doing business with Russian companies that are under sanctions.

Any ship supply service involved with Russian companies included in the sanctions is expected to face difficulties.   Continued...