EU adds Russian trio to sanctions and steps up focus on LNG

Three key Russian oilfield services providers have been targeted in the latest round of European Union sanctions as the bloc steps up pressure on the country’s oil and gas sector.

The three companies are drillers BK Eurasia and Siberian Service Company and pipeline construction contractor Neftegazpromstroy.

BK Eurasia and Siberian Service Company — commonly known in the industry as SSK — operate land-based modern drilling rigs in West Siberia and other oil provinces in the country.

Through its subsidiary BKE Shelf, BK Eurasia is also understood to own and manage four jack-up drilling rigs on the Caspian Sea that previously worked in the sea’s Russian, Turkmenistan and Kazakhstan sectors.

However, the rigs have been mostly idle in recent years as the pace of exploration and development drilling in the shallow waters of the Caspian Sea slowed, moving either to deepwater areas or super-shallow areas unsuitable for these jack-ups.

BK Eurasia was also sanctioned by the US following Russia’s annexation of the Crimea Peninsula from Ukraine in March 2024, with Washington expanding sanctions against this driller last year.

In 2014, the company was operating as Eurasia Drilling and the US sanctions forced the departure of two Soviet-era oil industry veterans and key shareholders.

SSK was also sanctioned by the US last year, though it had not been sanctioned by the EU previously.

According to SSK, it employs several thousand people at all key oil and gas production locations across Russia, and has capacity to drill up to 1.6 million metres of wells each year.

The company has also estimated that it accounted for between 5% and 8% of all drilling jobs in Russia in recent years, with the country’s major oil producers asking SSK to spud more complex holes with long horizontal sections to maximise recovery at legacy assets.

Privately-held pipeline building contractor Neftegazpromstroy — also known as NGPS — is based in Novosibirsk, East Siberia, and was founded in 2015.

According to the EU, the company has been involved in building numerous oil and gas pipelines and the development of oil and gas fields, contributing substantially to the growth of the Russian energy sector and “providing a substantial source of revenue to the government… which is responsible for the annexation of Crimea and the destabilisation of Ukraine”.

Also included in the latest package of EU sanctions are energy-related measures targeting Russia’s LNG sector, and measures targeting vessels that support Russia’s war against Ukraine, the blocs executive arm, the European Commission, said in a statement.

European authorities had made repeated requests for companies in the bloc to reduce purchases of Russian LNG. However, flows to the bloc have been on the rise, with supplies coming from the Novatek-led Yamal LNG and Vysotsk LNG projects, and from the Gazprom-led Portovaya LNG scheme.

The new round of EU sanctions prohibits all future investments in, and exports of, equipment and services to LNG projects under construction in Russia.

There is also a ban, after a transition period of nine months, on the use of European ports for the transshipment of Russian LNG.

The latest sanctions also prohibit the import of Russian LNG to specific terminals not connected to the European gas pipeline network.