U.S. oilfield companies could withdraw from Russia and easily replace the lost revenue with an expected boom in new oil and gas drilling elsewhere, a top oilfield service expert said on March 1.
Russia’s invasion of Ukraine has prompted Western energy companies to suspend operations or withdraw, leaving behind investments. Russia is among the world’s largest oil and gas producers that primarily relies on home-grown service providers.
The surge in oil prices will lift global spending on oilfield equipment and services by 30% this year over last to $260 billion, double the 14% increase previously forecast, Richard Spears, vice president of consultants Spears & Associates, said in an interview. Market growth will be the highest 2006.
Top oilfield service firms, including Schlumberger Ltd., Halliburton Co. and Baker Hughes Co. this week declined to comment on their Russian operations. Shares of Schlumberger were off about 4% on March 1, Halliburton was down 4.2%, and Baker Hughes fell 3.5%.
Schlumberger, the top oilfield service firm by revenue, gets between 5% and 6% of its revenue from Russia, Spears said.
“If Schlumberger loses all of its Russian business, it will more than make up for that simply by all the rising drilling and completions business all over the world,” he said. “It may lose 5% of its revenue, but it will grow by 20% all over the world.”
Global oil futures were up about 9.2% on March 1, trading over $107/bbl.
Schlumberger has been issuing regular bulletins to staff on the expanding sanctions that cover sharing critical-industry goods and technology in Russia, according to internal documents reviewed by Reuters. Initial U.S. and U.K. sanctions had “minimal” impact, the company told workers last month.
The company did not respond to a request for comment on the bulletins.
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