The sanctions placed on Russia as a result of the Russia-Ukraine conflict has led to a $237.5 billion decline in the Eastern Europe oil and gas project pipeline as restricted access to intermediate goods and international capital have halted the construction of numerous oil and gas projects.
That’s according to data and analytics company GlobalData, whose recently released report, titled Project Insight – Oil and Gas – Q2 2022, revealed that significant projects placed on hold have restricted the size of the pipeline. Novatek’s $21 billion liquified natural gas plant, Yamal Arctic 2, is one of many oil and gas projects in Russia that has been put on hold, GlobalData highlighted, adding that Russia dominates the project pipeline in Eastern Europe, representing 40.4 percent, with the total value of projects amounting to $95.9 billion.
According to information from GlobalData’s oil and gas intelligence center, the top 10 markets of the Eastern European oil and gas construction project pipeline, in order, comprise Russia, Kazakhstan, Uzbekistan, Poland, Georgia, Turkmenistan, Azerbaijan, Turkey, Bulgaria and Slovakia.
“These sanctions have weighed heavily on oil and gas project growth in Eastern Europe and caused extensive disruption to activity as countries plan to phase out Russian oil and gas entirely,” Jack Riddleston, construction analyst at GlobalData, said in a company statement.
“Projects funded by foreign entities have also had funding pulled and restricted supply chains have forced construction to a halt,” he added in the statement.
“In addition, the ban on imports will likely continue to suffocate upstream project growth in Russia as alienation from the West has driven down Ural crude prices and consequently driven down export revenue,” Riddleston went on to state.
As opportunities in the West have diminished, opportunities in the East have opened, however, the GlobalData analyst outlined.
“As a result, India and China have taken advantage of the discounted prices,” Riddleston said.
“India has been on a Ural oil spending spree and China has agreed to a 30-year deal to import natural gas through the Power of Siberia with plans to extend capacity with a new pipeline in North-East China,” he added.
Back in May, GlobalData revealed that, at the start of the first quarter of this year, global oil and gas industry contract activity was stifled due to the Russia-Ukraine conflict. In April, GlobalData outlined that, as a result of Russia’s invasion of Ukraine, upcoming LNG exports projects in the U.S. had received a “massive boost” as European and Asian buyers increasingly looked towards American LNG to reduce their reliance on Russian gas.
In March, GlobalData warned that major oil and gas companies suspending their operations in Russia could disrupt the progress of key Russian projects. In a company statement at the time, GlobalData identified BP, Shell, ExxonMobil, Equinor, OMV and TotalEnergies as some of the major oil and gas companies that had been impacted by the crisis.