SLB cuts as Russia sanctions tighten 2023

SLB has undertaken many operational and structural modifications to keep its Russian operations in conformity with Western sanctions on oil equipment and technology transfers to ride out efforts to curtail Russia’s use of energy to finance war.

SLB, the world’s largest oil services and equipment company, rebuffed human rights organizations’ pleas to leave Russia last year while Western rivals left immediately following Ukraine’s incursion. SLB didn’t violate penalties, but employees and human rights groups are upset.

According to papers, two sources, and an SLB spokeswoman, the former Schlumberger is limiting equipment transfers, prohibiting Russian staff from specific software and communications networks, and isolating the unit from other activities.

After Reuters revealed in January that SLB had grown operations in Russia by cherry-picking service and equipment contracts from rivals who withdrew, the Curacao-based business took action. The fighting and sanctions are affecting commerce, the corporation says.

“As international sanctions have evolved, we have taken further actions to curtail our activities, often beyond sanction requirements,” an SLB representative stated. The spokesman noted “additional controls restricting the shipment of all SLB-manufactured products and technology from the United States, United Kingdom, the European Union and Canada” to Russia.

The modifications “ensure our employees comply with all evolving sanctions,” the individual said.

Reuters could not determine why SLB restricted its Russian operations. This year, the U.S. imposed mining and metals sanctions on Russia.

SLB’s new internal limits were unremarked by the European Commission and U.S. Department of Commerce.

When the battle started last year, SLB had 10,000 employees in Russia helping Gazprom Neft, Rosneft, and other leading energy businesses pump more oil and gas. The segment generated 6% of its $28.1 billion sales in 2022.

According to SLB financial filings, Russia now accounts for 5% of company income, down from 6% at the end of 2022.

‘Tone Change’

Western oil corporations have not left Russia, but the U.S. and EU have banned fresh investment. Last year, financial transactions with Russia and energy equipment, technology, and services exports were banned.

SLB’s Russia, Caspian, and Kazakhstan operations were reorganized last month, a source claimed. The insider stated Russia is independent and the latter two report to Asia.

“It seems there is a change in tone about Russia,” stated an unnamed employee. The employee stated SLB communications began emphasizing technology constraints in February.

The insider said SLB stopped Russian personnel from accessing U.S. and British software and data in recent weeks. Russian staff may no longer use workplace chat forums.

“Any new Global SLB Group-wide systems/applications should not be connected to or accessible by Russia,” SLB informed staff in a late-March document Reuters saw.

Remaining is Best

In late February, CEO Olivier Le Peuch addressed staff concerns over SLB’s support for the Russian oil industry, which some regard as assisting Russia’s conflict against Ukraine. He acknowledged changing business conditions.

Le Peuch informed staff it was a “challenging situation” and that the firm is evaluating its presence but has no intentions to quit.

“At this point, we believe the best path forward for all stakeholders is to continue to operate in Russia, as long as we can do so in full compliance with international sanctions,” Le Peuch said in the talk, according to Reuters audio.