[lbo-talk] Oil Price: Russia can survive an oil price war

[Marv Gandall]

This is an important article (h/t naked capitalism) which helps explain the Putin government’s defiance of the NATO powers in support of the breakaway pro-Russian regions in eastern Ukraine. The sharp drop in oil prices has hurt, but the author argues that Russia is not deeply indebted, has sufficient currency reserves, has strengthened trade ties with China, and perhaps most important:

“Western involvement in Russian oil and gas plays is more pronounced than ever…Russian state-owned oil and gas giants Rosneft and Gazprom have increasingly allowed Western majors like BP, Eni, Exxon, Shell, Statoil, and Total access to some of Russia’s underdeveloped, but prized projects. Western companies have an estimated $35 billion tied up in Russian oil with hundreds of billions more planned and service providers Halliburton and Schlumberger each derive approximately five percent of their global sales from the Russian market. The Western majors remain committed to their extra-national ventures and these powerful relationships ultimately limit the sanctions’ scope.”

http://oilprice.com/Energy/Oil-Prices/Russia-Can-Survive-An-Oil-Price-War.html