Kremlin officials are dangling the prospect of lucrative investment deals for American energy companies, apparently seeking to convince President Trump that large economic gains could come from siding with Moscow in ending the war in Ukraine and scrapping economic sanctions on Russia.
There is no doubt that Russia has vast troves of oil and natural gas, but an effort to lure American or other Western energy companies to undertake Russian projects is likely to encounter skepticism, not least because of the companies’ recent history in Russia.
Nevertheless, Kirill Dmitriev, a Kremlin financial official, expressed optimism last week about the prospect, pitching the potential for investment opportunities by Western companies, including oil producers.
Energy companies would need to weigh access to troves of oil and natural gas against potential pitfalls, including reputational damage from taking part in an industry that has financially sustained a government waging war against its neighbor.
“Russia has enormous resources and scale always matters” to large energy companies, said Ben Cahill, an energy analyst at the University of Texas at Austin. “But aboveground risk is the killer,” he added, using industry parlance for political and legal problems.
After the collapse of the Soviet Union more than three decades ago, Western energy giants including Exxon Mobil, BP and Shell spent years carving out a role for themselves in the Russian oil industry.
But when Moscow invaded Ukraine in 2022, all of these companies felt compelled to either put their businesses on ice or walk away, leading to billions of dollars in write-offs. During their involvement in Russia, companies including BP, the London energy giant, encountered raids on their offices and other harassment.
“How many of those would tell you that they had a happy experience?” asked Thane Gustafson, a professor of government at Georgetown University who has written several books on the Russian energy industry.
Still, there appear to be potential routes for oil companies to go back to Russia. Exxon Mobil, for instance, gave up its role in a valuable oil project that it had operated on Sakhalin Island in the Russian Far East for 20 years, leaving its stake in limbo. “There is a potential for return,” said John Gawthorp, an analyst at Argus Media, a London research firm.
Exxon Mobil was also considered to have a relatively good relationship with its Russian partner Rosneft, the state-controlled oil company. And it had envisioned participating in other ventures, including work in the Arctic, where it drilled a decade ago, and shale drilling. Those activities were blocked by sanctions following Russia’s takeover of Crimea in 2014.
Exxon Mobil declined to comment on resuming work in Russia. It has written off $4.6 billion on the Sakhalin project, saying in a 2023 regulatory filing that management deemed the “carrying value” of the asset not recoverable.
Any return of Western companies to Russia is likely to require an end to the Ukraine conflict, and the removal of extensive sanctions imposed by the United States and the European Union on Russian oil and gas-related activities and entities. Analysts say it may become easier for American companies to return than for their European counterparts because Washington seems more inclined than Brussels to lift restrictions.
The energy giants, whose projects take years to complete, would also need to be convinced that they would not wind up facing new restrictions in a few years in the event of a change of government in the United States or renewed aggression by Russia.
“It would be very surprising to me if any U.S. company were to make a big investment in Russia,” said Edward Fishman, a former State Department senior official for sanctions on Iran and the author of a coming book on sanctions called “Chokepoints: American Power in the Age of Economic Warfare.”
Taking the wraps off the Russian industry may also not be in the interests of parts of the American energy industry. For instance, lifting U.S. curbs imposed by the Biden administration targeting exports of Russian liquefied natural gas is likely to create more competition for L.N.G. from the United States, which has replaced Russian gas in Europe during the last three years. “Russian L.N.G. on the global market is a direct competitor to U.S. L.N.G.,” said James Waddell, a gas analyst at Energy Aspects, a research firm. “This is not something that the U.S. administration would be willing to give away readily.”
Analysts also say the energy industry has changed since the early part of this century. The U.S. shale boom has given companies like Exxon Mobil and Chevron alternatives to potentially riskier international plays.
“The U.S. majors have far more attractive opportunities elsewhere in the world,” including the Gulf of Mexico, Brazil and Guyana, said Tatiana Mitrova, a research fellow at Columbia University’s Center on Global Energy Policy. “Why should they choose Russia, with its high political risks?”
Analysts say that energy companies may also no longer see the potential bonanza in Russia that was there after the collapse of the Soviet Union.
At that time, the application of Western technology to Russia’s huge resources greatly enhanced Russia’s output. That feat is unlikely to be repeated. Companies would probably not tell their shareholders that they “are rushing back in to seize a generational opportunity,” said Peter McNally, global head of sector analysts at Third Bridge, a New York research firm.
During the three years of sanctions, Russia has developed its own technologies and obtained support from China and India, now the main customers for its oil. “For me, it’s a question mark whether U.S. companies would be welcomed back as equal partners,” Ms. Mitrova said.
The Russian oil industry and government have always been ambivalent about sharing wealth with foreign investors. BP assembled a successful Russian oil company in the early part of this century but was subject to harassment including raids on its premises by armed security personnel. Bob Dudley, the chief of the local company, who later became chief executive of BP, was forced to flee Russia.
In 2013, BP managed to swap its Russian holdings for a package including a nearly 20 percent stake in Rosneft, the largest Russian oil company, After the invasion of Ukraine, BP gave up its two seats on the company’s board, stopped reporting its Russian earnings, and took a $24.4 billion charge. Dividends from the shareholding are being paid into restricted Russian bank accounts to which BP does not have access.
Earlier this month, Murray Auchincloss, BP’s current chief executive, brushed off an analyst’s question about reverting to a more normal approach to the Russian holding, noting that Rosneft remained under sanctions by more than a dozen countries. “Our principal focus now is on divesting the stake,” he said.
Of all large Western energy companies, TotalEnergies of France seems best placed to return to business as normal in Russia, if the political situation permits. The company wrote off $14.8 billion on its Russian business in 2022, but it has continued to import liquefied natural gas from a facility called Yamal that it helped develop in the Russian Arctic with Novatek, a Russian gas company in which the French company owns a 19 percent stake. TotalEnergies declined to comment, but it has said that these shipments contribute to Europe’s energy security.
Analysts say returning may be easier for smaller Western companies that provide services like hydraulic fracturing and other technical support. SLB, the former Schlumberger, is one of the largest such companies and continues to work in Russia, saying it is in compliance with sanctions.
These companies “trained large numbers of Russian oil workers, who are the backbone of the industry today, now that the Westerners have mostly departed,” Mr. Gustafson wrote in his coming book, “Perfect Storm.”
Rebecca F. Elliott contributed reporting.
