New US sanctions give Russian energy companies additional leverage

New US sanctions give Russian energy companies additional leverage
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The new US sanctions against Russia will entail unintended consequences for the United States, the article by National Interest says.

A bill called DETER that was introduced by Senators Marco Rubio and Chris Van Hollen suggests imposing sanctions on states that interfere in elections in the United States. As the article writer, vice president of the National Foreign Trade Council, Richard Sawaya, points out, in case the DETER bill is adopted and put into practice, it is economies of the USA and its allies that will be adversely affected by the sanctions.

In particular, the DETER act can destabilize the energy and financial markets and drive out American companies from Russia, something that their Chinese and European competitors would evidently benefit from. Moreover, the damage inflicted to the interests of the United States will be much more tangible than that the Kremlin would incur. American companies will have to leave joint ventures, abandon new projects and will incur considerable financial losses.

In addition, this poses risks to US companies acting in international markets. For example, if a Russian company acquires a stake in a project anywhere in the world, the American investors will have to withdraw from the project. Thus, the new sanctions will give Russian energy companies more control and more political leverage, Sawaya says.

Therefore, US oil companies will find themselves on the sidelines, as in a number of major oil regions of the world Russian companies and their Chinese partners are present and operating. Even projects that are endorsed by the United States with the view of reducing Russia's dominance in the energy market — such as the Trans-Adriatic Pipeline (TAP) — will be affected by the sanctions, strange as that may seem. And that will happen just because the Russian company is a minority shareholder in the Trans-Adriatic gas pipeline project.