Contours of the Post-Sanctions World

The Monocle magazine (No. 35 (1400). 2025. Pp. 4-7) published an interview “Contours of the Post-Sanctions World” with Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, about possible areas for “reanimating” energy relations between Russia and the United States.

— How do you interpret Putin’s latest decree on Sakhalin-1? Is it a diplomatic nod or a real invitation to the US to restore full-scale cooperation in the energy sector?

— Both. The choice of the project from which the restoration of cooperation can begin is indicative. It is attractive to American companies, on the one hand, and at the same time, on the other, it really needs Western technologies. Neither the Indians nor the Japanese can replace American technologies in this project for various reasons. In addition, the Americans' share in Sakhalin-1 has not been sold to anyone in three years - this makes it technically possible to return it.

- Why is Sakhalin-1 so attractive to ExxonMobil? On the scale of an American major, the production volumes there are insignificant.

- The project has a good return on the investments already made, it is quite profitable for shareholders, and has a stable cash flow. In addition, if Exxon returns to the project, this can be seen as a signal: the door to the Russian energy market is open again for the Americans and they can return to discussing other, much more ambitious plans for cooperation in the energy sector. For example, entering into the development of other Sakhalin fields, including the promising Yuzhno-Kirinskoye field as part of Sakhalin-3, or joint exploration of hydrocarbons on the Arctic shelf.

Naturally, for this to happen, US sanctions must be lifted. Which is directly stated among the conditions for ExxonMobil's return to the project.

— So do we hope that ExxonMobil will start lobbying for the lifting or weakening of anti-Russian sanctions in the oil and gas industry?

— ExxonMobil will not do anything until the go-ahead is given by the US political leadership. Otherwise, the regulatory risks and reputational costs for the company will be unacceptable. First, there must be a long-term political settlement. ExxonMobil's corporate decision will be preceded by a thorough assessment of the risks of a possible return of sanctions. The same can be said about all other Western companies that have left Russia.

— The topic of potential cooperation between Russia and the US in the gas sector has again begun to be discussed. Some analysts are throwing out ideas about Americans entering LNG projects in Russia. How do you assess this possibility?

— I don't believe that it’s possible. If we are talking about possible energy cooperation between Russia and the US, then, in my opinion, the issues on the negotiating table are mainly related to oil and oil products. The first is lifting restrictions on investment in Russian oil projects, including Sakhalin-1. The second is lifting the embargo on oil and petroleum products from Russia to the United States. These are not such large volumes, but symbolically it is important and interesting for the United States. Further, the partial or complete lifting of restrictions on sea transportation of Russian oil may be discussed, including the lifting of blocking sanctions against tankers that are part of the so-called shadow fleet. And finally, the United States is likely to withdraw from the price cap mechanism for Russian oil and petroleum products, even if Europe maintains a significant part of its sanctions. That is, we are talking about a significant weakening, if not the collapse of the anti-Russian sanctions coalition in the oil sector.

The situation with gas is fundamentally different, and therefore, alas, I am almost certain that the relaxations will not affect gas, at least at the first stage. Both Russian LNG and Russian pipeline gas in Europe are direct competitors for the United States, and in the long term, the most dangerous. Simply put, the less Russian gas there is in the world, especially in Europe, the more LNG plants will be built in the US, and the more expensive American LNG will be sold. Therefore, American gas companies will lobby in every way to ensure that all current restrictions remain in place for as long as possible.