US oil services group SLB is expanding into Russia as competitors pull back

The world’s largest oil services company is expanding into Russia after its main Western rivals left after Moscow’s full-scale invasion of Ukraine.

SLB, the Houston-based company formerly known as Schlumberger, made a public commitment in July 2023 to stop “shipping of products and technology to Russia” from its global facilities. Russian customs documents show that after the ban was imposed, such imports slowed to a halt by early September.

But the filings show the company also continued to import materials from other sources, bringing in $17.5 million worth of equipment between August and December 2023, the most recent date available for records. Of this, $2.2 million was declared to have been originally manufactured by SLB or its subsidiaries.

SLB declined to comment. A person close to the company said the imports were not “from an SLB facility” and were therefore “compliant with SLB’s public statements and international sanctions guidelines.”

The revelations come as SLB resists pressure to leave Russia from human rights groups and the Ukrainian government, which say its work in the country helps generate billions of dollars in oil revenue to support the Kremlin’s war effort . Last year, the National Agency for Corruption Prevention (NACP) added SLB to its “international war sponsor” blacklist, part of a global campaign to expose companies doing business with Moscow.

SLB’s two major American rivals in the oil services sector, Baker Hughes and Halliburton, left Russia after Moscow’s invasion of Ukraine. Both sold their Russian businesses to local managers in 2022, with the former taking a $365 million divestment fee. ABB, a Swiss-based conglomerate and supplier to the energy sector, has also announced that it will leave Russia in mid-2022.

Peter Voser, ABB’s chairman, said the Swiss company had lost “enough business” by refusing to take new orders in Russia and announcing its exit. “We accept that others may not follow suit and therefore may have a competitive advantage. But I think that’s a short-term view and it’s going to bite them at some point.”

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 “stopping shipments of products and technology to 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 percent of the group’s $33.1 billion in revenue and employed about 9,000 people. According to US regulatory filings, the company maintained $600 million in net assets in the country at the end of 2023.

Oilfield service providers do much of the grunt work for the global oil and gas industry—everything from building roads and laying pipelines to drilling wells and pumping crude oil. But it also provides access to sophisticated technologies that are vital to support the exploration and development of complex drilling operations.

Western policymakers have avoided imposing comprehensive sanctions on Russia’s oil services because of fears they would choke off fossil fuel exports and cause a spike in global oil prices.

In May, a US State Department official said that SLB had “so far” not breached the sanctions and that the company clearly understood “where the fences are”.

A Treasury spokesman said: “The United States and an international coalition opposed to Russia remain committed to reducing (Vladimir) Putin’s profits. At the same time, simply trying to stop the flow of Russian oil would have serious consequences for the global economy.”

Some of the goods imported by SLB into Russia are of types that other governments have expressed concern about: $3.3 million in equipment shipped since July are 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 the filings as electrical cables and chemicals.

The goods, however, come from countries that do not apply such controls. Most of the flow of SLB imports – worth $13 million – came from China, while another $3 million came from India. The most expensive piece was a $1.3 million “heavy-duty non-magnetic drill pipe” that was shipped from China.

SLB has supplied equipment to some of Russia’s largest oil companies, including Lukoil. In 2022 and 2023, it supplied Lukoil with drilling tools and hydraulic packers.

Revenue at SLB’s main Russian subsidiary rose by 527 million lei to 27.3 billion lei ($307 million) in 2023 compared to a year earlier, according to the subsidiary’s report according to 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 obliges the company to help it build models of oil and gas fields that can be used to develop projects.

The FT identified more than 1,000 job adverts posted by the company since December, looking for roles ranging 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 and corporate trademark databases by the FT show that SLB’s Russian subsidiaries registered two new trademarks in July.

“Politicians have to decide – are they serious about supporting Ukraine or not?” said Lela Stanley, a senior investigator for Global Witness, which is due to issue a report on SLB on Friday. “Western energy firms are still free to help Russia produce oil and help finance the war. It is a profound failure.”

SLB’s technology and expertise play a key role in enabling Russian operators to develop oil and gas projects at lower costs and with less risk, according to industry experts.

“The companies that remain are considered 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 president at Bank of America.