The world’s biggest oilfield services company has no plans to exit Russia two years after the invasion of Ukraine, despite western pressure to curb the flow of petrodollars to the Kremlin’s war machine.
Olivier Le Peuch, chief executive of SLB, told the Financial Times the company had taken no decision on whether to follow its two biggest rivals Baker Hughes and Halliburton in selling its Russia operations and is honouring its contracts with customers.
“When we decide, we will make it public if we need to. But now, there is no decision yet,” said Le Peuch when asked about the Houston-based group’s plans.
“The team over there is operating autonomously and I think is behind the curtain to some extent. We are protecting our assets, that’s our priority. We are protecting our people,” he said in an interview.
SLB, formerly Schlumberger, is resisting pressure to leave Russia from the Ukrainian government and human rights groups, which allege the company’s presence in the country helps to generate oil revenues used to support Russian President Vladimir Putin’s war effort.
Last year, Ukraine’s National Agency On Corruption Prevention (NACP) added SLB to an “international sponsor of war” blacklist, which is part of a global campaign to expose companies doing business with Russia.
SLB said in a statement that it strenuously denied any claim that it had “in any way endorsed or supported the violence against the people of Ukraine”.
Le Peuch said SLB had put in place controls “to prevent and ban any shipments and support of technology” to Russia since July — a move he suggested would, over the long term, degrade the country’s ability to develop some of its offshore oilfields.
Since the fall of the Soviet Union, SLB has built a major business in Russia, which generated about 5 per cent of the group’s $33.1bn revenues last year and employed about 9,000 staff. According to US regulatory filings, the company maintained net assets worth $600mn on a carrying value basis in the country at the end of 2023.
Oilfield services groups were hesitant to leave Russia amid a western exodus following the invasion in February 2022. But Baker Hughes and Halliburton, the second and third biggest western oil services firms, announced plans to pull out later that year after the US imposed sanctions.
Both groups sold their Russian operations to local management in Russia, with Baker Hughes taking a $365mn charge in 2022 linked to its exit from the country.
SLB stopped new investment and technology deployment in Russia in March 2022 and, following an escalation of sanctions, halted shipments of products into the country in July 2023. But unlike its rivals, it still retains a presence in the country.
Oilfield services providers carry out much of the grunt work for the global oil and gas industry — responsible for everything from building roads and laying pipes to drilling wells and pumping crude. But they also provide access to sophisticated technologies that are vital to support exploration and development of complex drilling operations.
“Russia’s oil industry would crumble without foreign oilfield services firms,” said Lela Stanley, senior investigator at Global Witness, a member of B4Ukraine, a coalition of NGOs working to cut Russia off from the means to wage war.
“Two years into this war, no western company should be propping up Russia’s most strategic industry while Putin spends those oil revenues destroying Ukraine.”
“The oil SLB helps to dig up in Russia funds a war that has killed ten thousand Ukrainian civilians. SLB leaving would be a major blow to Putin. What are they waiting for?’’
Agiya Zagrebelska, head of the direction of minimisation of corruption risks in sanctions policy at Ukraine’s NACP, said SLB was one of thousands of foreign businesses that, in effect, were openly supporting the Russian military machine.
“The company claims to not violate any sanctions requirements. It is necessary to eliminate such loopholes in the sanction regime, especially in such strategically important sectors for Russia.”
In response to follow-up questions after the interview with Le Peuch, SLB said it was acting “in clear support of and alignment with international sanctions and export restrictions that reflect international sentiment on these complex issues and are intended to facilitate a cessation of hostilities”.
“SLB takes its responsibility to comply with export control and economic sanction laws extremely seriously, and the company remains aligned with the international community in condemning and calling for an end to the war in Ukraine.”
Research by the Kyiv School of Economics shows that 1,651 foreign companies continue to operate in Russia following the invasion, compared to 372 which have exited completely.
There are few signs of an investor backlash against companies who stay in Russia, despite warnings from rights groups that companies could be complicit in war crimes committed by the Kremlin.
Last month, Mondelez chief executive Dirk Van de Put said no shareholders had asked the chocolate maker to leave the country, adding that they cared more about a material hit to their investment than the moral issue.
Western governments have also been wary of tightening sanctions on Russia’s oil and gas industry over concerns it could lead to a surge in commodity prices which destabilises the world economy. But some experts argue this fear is overdone.
“Some people might fear that a ban on advanced western oilfield technologies might cause a rapid fall in production,” said Craig Kennedy, a Harvard-affiliated scholar and former vice-chair at Bank of America.
“But Russia has the means to maintain production without these technologies — it will just be more costly. And the more they have to spend producing barrels, the less left over for bombs.”
