Survival of the Fleetest: Russian Oil Companies under Western Sanctions

Abstract

This article explores the impact of Western sanctions on the Russian oil sector since February 24, 2022. These sanctions have targeted individuals, companies, technologies, and processes, with the US banning Russian oil imports and the EU imposing various restrictions on investments, energy technologies, and goods. Despite these challenges, Russian oil companies have shown remarkable resilience. In 2022, crude oil production and oil exports increased, and oil revenues grew. Gasoline and diesel fuel production also jumped significantly. Russian companies adapted to sanctions by focusing on import substitution and seeking new partners in Asia and other parts of the world. In particular, they increased exports to China and India and strengthened ties with Chinese and Indian energy companies. However, the longer-term outlook is less promising, particularly when it comes to developing hard-to-recover reserves, which will be a very serious challenge without state-of-the-art Western technology.