European sanctions will forbid countries to export equipment that may help Russian oil drilling, but one Norwegian shipping magnate is helping Russian oil companies skirt the rules.
The European Union announced some of the toughest Russian sanctions yesterday, cutting off access to to equipment made for deepwater and arctic oil production, along with other restrictions on arms and financing, set to take effect tomorrow.
However, Seadrill Ltd. (NYSE:SDRL) will go through with its plans to lease six rigs from its North Atlantic Drilling unit to Russian oil giant OAO Rosneft (LON:ROSN) through a subsidiary company, North Atlantic Drilling Ltd. (NYSE:NADL.) Since the $4.25 billion contract was inked on July 29, it's not subject to sanctions that take effect as soon as tomorrow.
The companies are both controlled by John Fredriksen, a Norway-born Cypriot citizen whose nickname is the Viking King, according to Bloomberg. He's been working in the oil trade since the 1960s and ran crude for Iran in the 1980s before he got into the drilling business with Seadrill in 2005, according to Forbes.
North Atlantic Drilling announced their intentions back in May, with plans to develop Rosneft's projects until 2022.
“We are very pleased with the execution of these contracts, which is in line with the timetable agreed earlier this year,” Alf Ragnar Lovdal, the Hamilton, Bermuda-based company's chief executive officer said on Wednesday.
The most recent sanctions from the U.S. on Russia are meant to “impose additional significant costs on the Russian Government for its continued activities in Ukraine,” by targeting the banking, energy and arms sectors, the U.S. Treasury Department said on Tuesday.
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