Published by Global Banking and Finance Review
Posted on January 11, 2025
MOSCOW (Reuters) - Russian oil producer Gazpromneft shrugged off the impact of major new U.S. sanctions on Friday, while insurance company Ingosstrakh said they would create a market vacuum that would benefit less reputable competitors.
The outgoing administration of President Joe Biden on Friday imposed its broadest package of sanctions yet, targeting Russia's oil and gas revenues in an attempt to give Kyiv and the incoming administration of Donald Trump leverage to reach a deal for peace in Ukraine. A U.S. official said the measures should cost Russia billions of dollars a month.
Gazpromneft, also hit by British sanctions, said it would continue to operate and maintain business resilience despite the measures, which it called "unjustified, illegitimate and contrary to the principles of free competition".
"Gazpromneft has been consistently preparing for various negative sanctions scenarios over the past two years. In addition, the company has already been under unilateral foreign sanctions since 2022, so many such restrictions have already been factored into operational processes," the company said in a statement.
Ingosstrakh, a Russian insurance company that was also hit by the U.S. move, said it was operating normally and fulfilling all its obligations to clients.
"Coming in the waning days of the outgoing U.S. administration, this decision undermines maritime safety, environmental protections, and global shipping stability by targeting a reputable and well-capitalized insurer," it said.
"Removing Ingosstrakh from the market creates a vacuum that will inevitably be filled by fly-by-night insurers lacking the capacity or intent to ensure compliance or pay claims."
Ingosstrakh said this dramatically heightened the risk of environmental disasters such as oil spills, while shifting the financial burden onto taxpayers when uninsured or underinsured vessels failed to meet their obligations.
Russian economist Yevgeny Kogan said the sanctions could force Gazpromneft to cut its production plans, and impact its dividend payments.
He said they would also hit the export potential of oil major Surgutneftegaz, the other main company to be targeted.
The U.S. move was expected by Moscow. Hours before it was announced, Kremlin spokesman Dmitry Peskov told reporters: "We are aware that the (Biden) administration will certainly try to leave the most burdensome legacy in terms of bilateral relations to the incoming Trump and his associates. Well, in line with these efforts, it is quite possible that another batch of sanctions may be introduced."
President Vladimir Putin has often boasted of Russia's resilience to sanctions imposed against it over the Ukraine war, saying they have boomeranged on the Western economies that applied them.
(Reporting by Olesya Astakhova, Vladimir Soldatkin, Darya Korsunskaya and Moscow bureau; Writing by Mark Trevelyan and Alison Williams)
