For some western companies working in Russia, taking a moral stance isn’t necessarily logical. The world’s largest oilfield services group, American company SLB, has been reported as expanding its operations in Russia, posting 1,000 job ads since December and registering two new trademarks through local subsidiaries last month.
SLB’s two main US competitors sold their Russian business to local managers following the invasion of Ukraine in 2022, but SLB never committed to doing the same — and now appears to be capitalizing on the lack of competition. Ukraine’s National Agency on Corruption Prevention has described SLB as an ‘international sponsor of war,’ but the Kyiv School of Economics has found that only 11% of international firms have left Russia since the war began, and that those staying are ‘using their momentum to take the market share of those who are leaving or left.’
Despite US political rhetoric condemning cooperation with Russia — Washington recently described Hungary’s continued use of Russian fossil fuels as a ‘dangerous addiction‘ — hundreds of major US businesses continue to work there. Earlier this year, the CEO of American food giant Mondelez claimed investors don’t ‘morally care’ about staying, and that it’s the risk to their assets that drives decision-making.
The stakes are particularly high in the energy and fuel trade, given Russia’s superpower status in raw materials, and cutting off Moscow has never been as simple as politicians would have us believe. NGO Global Witness found that in 2023, the EU imported 130 million barrels of ‘laundered’ products worth a total €1.1 billion from refineries processing Russian crude. The EU is currently paying hand over fist for Russian gas following the invasion of Kursk, which endangers pipeline gas flows to Central Europe via Ukraine.
In this context, investors who care more about the bottom line than making a moral statement may be questioning the zeal of companies which exited Russia. The boss of Swiss-based oil and gas firm ABB, which has already exited the country, has lamented the ‘competitive advantage’ enjoyed by those who stayed.
This is a conundrum for Washington, given concerted efforts by the US to become Europe’s new fix for fossil fuels (the US now provides around half of the EU’s LNG supplies, up from a quarter before the war). The US Department of State admits that while it is ‘committed to reducing Putin’s profits,’ when it comes to the work of companies such as SLB, ‘simply aiming to stop the flow of Russian oil would have serious consequences for the global economy.’
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