Even a combination of Western sanctions and lower oil prices is unlikely to bring Russian oil companies to their knees any time soon. Significant cash balances, strong cash flows, manageable debt maturities and refinancing needs, as well as relatively low-cost operations and promises of support from a government with big foreign currency reserves, mean that blacklisted Russian oil firms are unlikely to face any serious liquidity pressures through at least the end of 2015. That does not mean sanctions are not having an impact on the Russian oil sector, as capital continues to exit the country, borrowing costs tick higher, and US and European partners put exploration partnerships with state-controlled oil companies like Rosneft and Gazprom Neft on hold. On Oct. 19 Moody's cut its government debt rating on Russia to Baa2 from Baal, next to the lowest investment grade rating, citing the country's "subdued" economic growth prospects that have been aggravated by sanctions and lower oil prices. But Brussels and Washington must be prepared to play a long game if they want to inflict serious damage on Russia's crucial oil sector. State-run producers Rosneft and Gazprom Neft — the oil arm of gas giant Gazprom — as well as government-controlled pipeline giant Transneft face the harshest sanctions. All three were effectively banned from long-term capital markets in the EU and US on Sep. 12. The US ban also included independent gas producer Novatek. But Russian companies' access to international capital markets has effectively been closed since March, when Russia annexed Crimea, due to the threat of sanctions that undermined investor confidence and slashed the appetite for Russian bonds. In June, privately owned Lukoil postponed a euro-bond flotation worth $1.5 billion, citing the unfavorable environment Indeed, there have not been any eurobond issuances by Russian companies since March.
展开▼
