NYT: Kremlin lures US companies with big rewards

Kremlin officials are actively courting the US energy companies with the promise of lucrative investment opportunities. 

The New York Times highlights in a recent article that Kremlin officials are presenting lucrative investment opportunities to the US energy companies, seemingly hoping to persuade President Donald Trump that substantial economic rewards could follow if the US aligns with Moscow to end the war in Ukraine and lift the ongoing economic sanctions on Russia.

While Russia is known to possess vast reserves of oil and natural gas, efforts to entice American or other Western energy firms into Russian projects are likely to encounter skepticism, especially in light of the companies' recent experiences within the country.

However, Kirill Dmitriev, a financial official within the Kremlin, expressed optimism last week, emphasizing the potential for investment from Western companies, including oil producers.

Energy companies would need to weigh the prospect of tapping into Russia’s vast energy resources against the potential risks, including reputational damage from engaging in an industry that has financially supported a government involved in war with its neighbor.

“Russia has enormous resources and scale always matters” to large energy companies, said Ben Cahill, an energy analyst at the University of Texas at Austin. “But aboveground risk is the killer,” he added, using industry parlance for political and legal challenges.

After the collapse of the Soviet Union over three decades ago, Western energy giants such as Exxon Mobil, BP, and Shell invested years into establishing themselves in Russia’s oil industry.

When Russia invaded Ukraine in 2022, all these companies felt compelled to either suspend their operations or completely exit the country, leading to billions of dollars in write-offs. During their time in Russia, companies like BP faced raids on their offices and various forms of harassment.

“How many of those would tell you that they had a happy experience?” asked Thane Gustafson, a professor of government at Georgetown University who has written extensively on the Russian energy sector.

Despite the challenges, there appear to be potential avenues for oil companies to return to Russia. For instance, Exxon Mobil relinquished its stake in a major oil project on Sakhalin Island in the Russian Far East, where it had operated for 20 years, leaving its investment unresolved. “There is a potential for return,” said John Gawthorp, an analyst at Argus Media, a London-based research firm.

Exxon Mobil was also seen as having a relatively strong relationship with its Russian partner, Rosneft, the state-controlled oil company. The company had planned to participate in additional ventures, including Arctic projects where it had previously drilled, and shale drilling. However, these activities were blocked by sanctions following Russia's annexation of Crimea in 2014.

Exxon Mobil declined to comment on the possibility of returning to Russia. The company has written off $4.6 billion related to the Sakhalin project, stating in a 2023 regulatory filing that its management considered the "carrying value" of the asset to be unrecoverable.

For Western companies to return to Russia, it seems likely that the Ukraine conflict would need to end, and the extensive sanctions imposed by the United States and the European Union on Russian oil and gas activities would need to be lifted. Analysts suggest that it may be easier for American companies to re-enter the market than their European counterparts, as Washington appears more inclined to lift restrictions compared to Brussels.

By Naila Huseynova