Russia's Energy Giants Rivalry Lingers Despite Sanctions

The western sanctions against Russia are not expected to alter the rivalry between Russian energy companies Gazprom and Rosneft, experts said Friday. 



Russian state-run gas company Gazprom signaled last week that it may help its rival Rosneft for oil and gas exploration activities in the Arctic, in the Kara Sea, by sharing technology and offering drilling rigs. 



"Sending one piece of equipment does not remove inherent rivalry that two state corporations continue to hold," said Ilya Zaslavskiy, a Robert Bosch fellow with the Russia and Eurasia Program at the London-based think-tank Chatham House. 



Rosneft, the Russian state-owned oil company, was conducting exploration activities in the Arctic with the U.S. energy giant ExxonMobil until early October, when the western sanctions against Russia put an end to the cooperation. 



"Gazprom and Rosneft are natural competitors," said Marcel Salikhov, the head of the economics department at the Moscow-based Institute for Energy and Finance. 



"There are some serious disputes between Gazprom and Rosneft over specific deals, projects, gas supplies and access to pipelines," he added. 



Salikhov said the disputes between Gazprom and Rosneft, include gas supplies to Russia's largest island -- Sakhalin, and also involve Rosneft's aim to access Gazprom's pipeline to provide liquefied natural gas supplies to projects in the far eastern federal region of Dalnevostochny.



"The sanctions have worked both ways," said Liza Ermolenko, an energy markets economist at Capital Economics, a London-based independent research company. "They have pushed some rival companies closer, but they have also intensified other conflicts."



"Greater cooperation between Russian companies is hardly going to replace Western companies. Some technologies are simply not produced within Russia, and if they can't be imported, certain projects will have to be stalled," she added. 



Sanctions hurdle



Despite the sanctions which prevent Russian companies from importing high-tech equipment from western firms, Rosneft announced in October that it will continue oil and gas explorations with or without the help of western energy companies. 



"Under the sanctions most Western companies halted their cooperation plans, meaning that Rosneft and Gazprom need other non-Western partners or need to finance the works themselves," Salikhov said. 



"It's really rational for the two companies to cooperate in the Arctic shelf development, where they own almost all Arctic shelf license blocks, as a way of cutting costs and sharing infrastructure. But, it would be difficult given the fierce competition in other areas," he added. 



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