The world’s biggest oilfield services company is expanding in Russia following the exit of its main western rivals since Moscow’s full-scale invasion of Ukraine.
SLB, the Houston-based company formerly known as Schlumberger, made a public commitment in July 2023 to halt “shipments of products and technology into Russia” from its global facilities. Russian customs filings show that after this ban was imposed, such imports slowed to a stop by the start of September.
But filings show the company also continued to import materials from other sources, bringing in $17.5mn of equipment between August and December 2023, the most recent date of available records. Of this, $2.2mn was declared as having been originally manufactured by SLB or its subsidiaries.
SLB declined to comment. A person close to the company said the imports are not “from an SLB facility” and are therefore “consistent with SLB’s public statements and within international sanctions guidelines”.
The disclosures come as SLB resists pressure to leave Russia from human rights groups and the Ukrainian government, which allege its work in the country helps to generate billions of dollars of oil revenues to support the Kremlin’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 Moscow.
SLB’s two largest US rivals in the oil services sector, Baker Hughes and Halliburton, exited Russia following Moscow’s invasion of Ukraine. They both sold their Russian businesses to local managers in 2022, with the former taking a $365mn charge linked to the disposal. ABB, a Swiss-headquartered conglomerate and supplier to the energy sector, also announced it would exit Russia in mid-2022.
Peter Voser, ABB chair, said the Swiss company had lost “quite a bit of business” by refusing to take new orders in Russia and announcing its exit. “We accept that some others will maybe not follow that and hence, they may have a competitive advantage. But I think that’s a short-term viewpoint and that will bite them at some stage.”
Baker Hughes and Halliburton declined to comment.
Unlike its main rivals SLB has said it has no plans to leave Russia. But in July 2023 the company said it was “halting shipments of products and technology into Russia from all SLB facilities worldwide”.
SLB has built a large business in Russia since the fall of the Soviet Union. Last year operations in the country generated 5 per cent of the group’s $33.1bn revenues, and it employed about 9,000 staff. According to US regulatory filings, the company maintained net assets worth $600mn in the country at the end of 2023.
Oilfield services providers carry out much of the grunt work for the global oil and gas industry — 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.
Western policymakers have avoided imposing comprehensive sanctions on oilfield services in Russia over concerns it would choke off fossil fuel exports and cause a spike in global oil prices.
In May a US Department of State official said SLB had “thus far” not breached sanctions and the company had a clear understanding of “where the guardrails” were.
A Treasury spokesperson said: “The United States and an international coalition opposing Russia remain committed to reducing [Vladimir] Putin’s profits. At the same time, simply aiming to stop the flow of Russian oil would have serious consequences for the global economy.”
Some of the goods SLB imported into Russia are of types that other governments have expressed concerns about: $3.3mn of the equipment shipped since July is in categories that could be subject to controls if exported from the EU to the country. The most expensive items in this category are described in filings as electrical cabling and chemicals.
The goods, however, come from countries applying no such controls. Most of the flow of SLB imports — $13mn worth — came from China, while a further $3mn came from India. The most expensive single part was a $1.3mn “heavy-duty non-magnetic drill pipe”, which was shipped from China.
SLB has supplied equipment to some of Russia’s largest oil companies, including Lukoil. In 2022 and 2023 it provided Lukoil with drilling tools and hydraulic packers.
Revenues at SLB’s main Russian subsidiary increased by Rbs527mn to Rbs27.3bn ($307mn) in 2023, when compared with a year earlier, according to the subsidiary’s report under Russian accounting standards.
Documents obtained by Global Witness and seen by the Financial Times show that in December SLB’s Russian business signed a contract with the Russian oil and gas institute Vnigni, which commits the company to help it build models of oil and gas deposits that can be used to develop projects.
The FT has identified more than 1,000 job advertisements posted by the company since December, seeking roles that range from drivers to chemists and geologists. Benefits on offer range from lunch at work and access to sports facilities to participation in discounted share schemes.
Searches of Russian trademark and corporate databases by the FT show SLB Russian subsidiaries registered two new trademarks in July.
“Policymakers need to decide — are they serious about supporting Ukraine or not?” said Lela Stanley, a senior investigator for Global Witness, which is set to issue a report on SLB on Friday. “Western energy firms are still free to help Russia produce oil, and to help fund the war. That’s a profound failure.”
SLB’s technology and expertise play a critical role in enabling Russian operators to develop oil and gas projects at lower cost and with less risk, according to industry experts.
“Companies that stay are seen as loyal by the Kremlin and will be in line for medals in the form of preferential treatment when the war ends,” said Craig Kennedy, a Harvard-affiliated scholar and former vice-chair at Bank of America.
