March 2, 2018
EnergySource Explains: How Has Russia Responded to Energy Sanctions?
By Global Energy Center
1. While sanctions have significantly impacted the Russian economy, they missed their mark when it comes to energy. Russia’s oil production and investment is thriving, growing every year since sanctions were imposed with production growth hitting an eleven year high in 2016.
2. Even though oil and gas prices have dropped precipitously since 2014, Russia is still comfortably managing its energy sector. In fact, the United States and the European Union may have done Russia a favor, suspending high cost projects, including offshore Arctic development, that would not be economic at current prices.
3. Russia's energy successes, including progress on the Nord Stream 2 and Turkstream pipelines, have renewed political momentum for President Vladimir Putin and Moscow at home and abroad.
Bottom Line: Changing Russian behavior requires ratcheting up the pressure. This would include tightening restrictions on participation in Russian energy projects, including by service companies, addressing foreign investment in current as well as future oil and gas development projects, and imposing stronger antitrust restrictions on Russian gas exports.