Weatherford does not come out of the well – Kommersant
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According to Kommersant, the Russian division of the international oilfield services company Weatherford intends to continue its activities in the Russian Federation, despite Western sanctions. Last year, Weatherford’s global office stopped investing in business in Russia and supplying technology. The Russian market accounts for approximately 7% of Weatherford’s total revenue. Of the Big Four oilfield services, in addition to Weatherford, Schlumberger also continues to work in Russia, while Halliburton and Baker Hughes sold their assets in the Russian Federation to local management.
The Russian division of the international oilfield services company Weatherford intends to continue fulfilling existing contracts and entering into new agreements with customers. This follows from the reports of Russian Weatherford structures, including Weatherford LLC, which accounts for the bulk of the company’s income in the Russian Federation. Until now, Weatherford has not publicly announced its position regarding the continuation of work in the Russian Federation after the imposition of Western sanctions for the outbreak of hostilities in Ukraine. In its reporting, Weatherford only promised to fulfill existing contractual obligations, subject to compliance with the sanctions.
The revenue of Weatherford LLC at the end of 2022 increased by 23%, to 20.1 billion rubles.
The business in Russia accounts for about 7% of Weatherford’s total revenue, which last year amounted to about $4.3 billion. Weatherford is registered in Ireland and is headquartered in Texas (USA). It is informally referred to as one of the “big four” oilfield services companies along with Schlumberger, Halliburton and Baker Hughes.
The reduction in the presence of international oilfield service players in the Russian market began in 2014, when the US and the EU imposed sectoral sanctions against the Russian Federation after the annexation of Crimea. Against the background of these sanctions and lower oil prices, Rosneft began to consolidate drilling assets and acquired Weatherford’s drilling business in Russia and Venezuela, the deal was estimated at about $400 million. At the same time, Weatherford retained its oilfield services business in Russia.
Following the sanctions imposed in 2022, Schlumberger, Halliburton, Baker Hughes and Weatherford announced a reduction in their presence in Russia, including the termination of investments in Russian businesses and a ban on the supply of technologies in accordance with the sanctions. But only Halliburton and Baker Hughes completely exited Russian assets, selling them to local management.
The reporting of Weatherford LLC states that the company “successfully rebuilt the supply chains” of equipment that was imported before the sanctions, replacing suppliers with Russian or those foreign companies that are ready to supply it to Russia.
KPMG (now Kept) estimates that the Big Four accounted for 15% of the Russian oilfield services market, but remained a key supplier of advanced technologies in areas such as enhanced oil recovery and production stimulation. In these segments, the share of the “big four” was 52%, follows from last year’s review of the consulting company.
Weatherford continues to operate in Russia, providing clients with the same services as before: drilling support, well construction, well testing, says Dmitry Kasatkin from Kasatkin Consulting. He notes that the sanctions affected the import of technology and software licenses. According to the expert, the geography of the company’s business in the Russian Federation covers all key production regions, including Sakhalin, Western Siberia and Timan-Pechora, the main customer is Rosneft. He emphasizes that the Russian business provides 6-7% of Weatherford’s total revenue, which is quite significant. The growth of horizontal drilling and the need for production stimulation will help strengthen the company in the Russian market even in conditions of partial isolation, Mr. Kasatkin believes.
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