Obama’s sanctions against Russians steer clear of Gazprom

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The Obama administration announced a new round of sanctions against Russian companies and individuals on Monday, aimed at hurting President Vladimir Putin’s “inner circle.”

But the sanctions steer clear of Russia’s state-owned energy company and main energy weapon against Europe — the natural gas giant, Gazprom.

“The United States made clear it would impose additional costs on Russia if it failed live up to its Geneva commitments and take concrete steps to deescalate the situation in Ukraine,” White House press secretary Jay Carney said in a statement. “Consequently, today the United States is imposing targeted sanctions on a number of Russian individuals and entities and restricting licenses for certain U.S. exports to Russia.”

The Treasury Department will be imposing sanctions on seven Russian government officials and 17 companies that are “linked to Putin’s inner circle”, according to Carney. But while the U.S. targets the CEOs of state-owned oil and technology companies, Gazprom officials have gone unscathed.

Energy analysts have postulated that the omission of Gazprom from the second round of sanctions due to Europe’s reliance on natural gas from Russia. Any sanctions placed on the state-owned company could result in Gazprom shutting off natural gas supplies to Ukraine and parts of Europe.

“Simply put, sanctions that limit access to, or increase the price of, Russian crude, natural gas, coal and products could hurt Russia’s biggest trade partners, Europe most of all,” write energy analysts at ClearView Energy.

Europe gets about one-third of its natural gas from Europe, about 13 percent of which flows through Ukrainian pipelines. Shutting off supplies to Ukraine amid the ongoing political crisis could send natural gas prices skyward and hut Europe’s economy hard.

“It may be tempting to point to the recent success of bottom-up sanctions against Iran as a template for action against Russia, but Russia’s energy leverage over Europe and the greater economic interconnectedness between the West and Russia aren’t the only distinctions we would offer,” ClearView analysts wrote.

“Some [White House] sources acknowledged challenges associated with unilaterally sanctioning the Russian energy sector, too, especially the prospect that Europe’s ‘national champions’ might replace U.S. companies currently operating in Russia without meaningfully diminishing Russian resource revenue realization,” they continued.

The latest round of U.S. sanctions are meant to build upon previous sanctions against Russian individuals close to Putin. The Obama administration hopes that freezing their bank accounts and restricting their visas will convince Putin to abandon his plans to annex the Crimean peninsula and possibly even Eastern Ukraine.

“The goal here is not to go after Mr. Putin personally,” President Obama said at a conference in the Philippines. “The goal is to change his calculus with respect to how the current actions that he’s engaging in could have an adverse impact on the Russian economy over the long haul.”

U.S. sanctions have been done in conjunction with the European Union, but so far both powers have been hesitant to target Russia’s natural gas industry.

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