By William Mauldin and Daniel Gilbert
The U.S. joined the European Union in expanding sanctions to
target Russian Arctic and shale-oil projects and further limit
financing to Russian state-controlled companies, a move to put
pressure on Moscow as Ukraine negotiates a long-term peace plan and
closer ties to the E.U.
The energy sanctions announced Friday, widely expected in recent
days, will prevent Western energy firms from providing technology
and services -- other than financial services -- to five Russian
energy majors' oil projects in the Arctic, deep offshore fields and
shale, the U.S. Treasury Department said.
The energy sanctions could directly impact partnerships such as
Exxon Mobil Corp.'s (XOM) pact with OAO Rosneft (ROSN.MZ), one of
the five firms targeted, according to U.S. officials and legal
experts. The two companies have been drilling in the Arctic Kara
Sea, as well as exploring for oil in a Siberian shale-rock
formation.
Exxon agreed to pay for the majority of exploration costs for
the Arctic, estimated at more than $3.2 billion, in exchange for a
33% stake in the venture. The deal has given Exxon unique access to
a swath of Russia's Arctic larger than Texas, which could hold
billions of barrels worth of oil and natural gas.
An Exxon spokesman didn't immediately respond to a request for
comment. The company has said it is assessing the sanctions and
will comply with all laws.
Some legal experts said the new sanctions could jeopardize the
contracts Western firms have in Russia.
"It's unclear whether U.S. companies can fulfill certain
contractual obligations such as payments to their Russian
counterparts," said Eric Lorber, a lawyer at Gibson, Dunn &
Crutcher LLP who advises companies on how to comply with sanctions.
"They may be faced with a particularly difficult choice," he said,
"violating the terms of their contract" or being subject to
enforcement actions by the U.S. He also noted that the government
has given the companies an unusually short period of time to comply
with the sanctions.
The U.S. and Europe added OAO Sberbank (SBER.MZ), by far
Russia's biggest bank, to the list of financial institutions and
companies that Western companies and individuals are barred from
lending to beyond the short term. The length of financing that's
allowed to the Russian firms was reduced to 30 days from 90 days
under previous rounds of sanctions. In addition, several defense
firms were put on the sanctions list, and the U.S. Treasury moved
to restrict financing to Rostec, a sprawling defense and industrial
conglomerate owned by the Russian state.
U.S. and E.U. officials emphasized that the sanctions are
reversible and could be rolled back if the peace process is
completed successfully.
"It is essential that Russia work with Ukraine and other
international partners to find a lasting settlement to the
conflict," U.S. Treasury Secretary Jacob Lew said in a statement.
"If Russia does so, these new sanctions could be suspended. If
instead Russia chooses to continue its violations of international
law, the costs will continue to rise."
Russian President Vladimir Putin said that the sanctions
threaten the peace process in Ukraine and that Moscow is
considering retaliating against the sanctions, the Interfax news
services reported.
Also Friday, Russian Economy Minister Alexei Ulyukayev warned
Russia may introduce "protective measures" against a number of
Ukrainian goods, Interfax reported. The warning comes after an
earlier announcement by Ukrainian President Petro Poroshenko that
Ukrainian and European parliaments would be signing Ukraine's
association agreement with the European Union on Tuesday.
Write to William Mauldin at william.mauldin@wsj.com and Daniel
Gilbert at daniel.gilbert@wsj.com