US sanctions on Russian oil chief raise concerns for foreign companies, investors

The Associated Press

FILE - In this Friday, Oct. 11, 2013 file photo CEO of state-controlled Russian oil company Rosneft Igor Sechin commissions new equipment at the Rosneft oil refinery in the Black Sea port of Tuapse, southern Russia. The U.S. Department of the Treasury on Monday, April 28, 2014, designated seven Russian government officials, including two key members of the Russian leadership’s inner circle, and 17 entities pursuant to Executive Order (E.O.) 13661. E.O. 13661 authorizes sanctions on, among others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official. Sechin is on the list. (AP Photo/RIA-Novosti, Alexei Nikolsky, Presidential Press Service, File)

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Sanctions and the Ukrainian crisis are already having an impact on foreign companies, if indirectly. Fears that sanctions will slow the Russian economy have caused the ruble to drop sharply in recent months, cutting the value of Russian earnings and assets.

BP said its earnings from its stake in Rosneft fell sharply in the first quarter because of the ruble's decline. Earnings from BP's stake in Rosneft fell to $271 million in the quarter ended March from $1.08 billion during the fourth quarter of last year.

Another effect of the sanctions is that foreign investors are delaying or pulling out of deals in Russia out of concern that further sanctions or turmoil will unravel them.

"The general effect of restricting the flow of international credit to Russia has had quite a chilling effect not just to Russia itself but in the companies that deal with them," said Chatham House's Hanson.

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Fahey reported from New York.

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