U.S. adds Russian Far East oil and gas field to sanctions list

(Bloomberg; Aug. 7) -One of Gazprom’s largest offshore oil and gas fields, potentially a supply source for the expansion of Russia’s only liquefied natural gas plant, has been added to a U.S. sanctions list. Export administration regulations were amended to require a license from the U.S. Bureau of Industry and Security for the export or transfer of any regulated items to the Yuzhno-Kirinskoye field off the coast of Sakhalin Island in Russia’s Far East, according to a U.S. Department of Commerce statement.

Russian relations with the U.S. have sunk to their lowest levels since the Cold War following the annexation of Ukraine’s region of Crimea last year. The U.S. has placed sanctions on Russia, limiting lending and banning exports of equipment and technology to drill for oil and gas offshore in the Arctic, deep-water and shale formations. A U.S. license is warranted because the Yuzhno-Kirinskoye field presents an “unacceptable risk” for the use of sanctioned technology, the Department of Commerce said.

Shell, meanwhile, is discussing gaining access to Yuzhno-Kirinskoye, which is included in the proposed Sakhalin-3 oil and gas project, as part of potential asset swaps with Gazprom. The Yuzhno-Kirinskoye deposit holds 22.5 trillion cubic feet of gas and about 800 million barrels of liquids, according to Gazprom. The company has said the field would feed an expansion of Sakhalin-2, Russia’s only LNG export plant. Shell holds 27.5 percent of the Gazprom-led Sakhalin-2.