Former British Petroleum chief Tony Hayward has warned that US and EU sanctions against Moscow are threatening to turn round and bite the West by hindering global oil supplies and pushing up prices in coming years.
In an interview with the Financial Times, published on Monday, Hayward said that cutting off capital markets from Russia's energy groups, which would eventually lead to less investment in Russian oil production, was likely to damage long-term supply.
He said the US shale boom had obstructed the growing risks to the world’s supply picture, but its effect would wear off, leaving the global economy dangerous exposed to potential disruption in the flow of oil, the daily cited him as saying, adding his comments came as the US and Europe expanded sanctions against Russia on Friday with the US adding Gazprom, the leading energy provider for Europe, and the Lukoil oil group to the list of companies deprived of US goods, technology and services for deepwater, Arctic offshore and shale projects. EU and US sanctions have also imposed restrictions on financing for some state-owned Russian energy companies.
"The world has been lulled into a false sense of security because of what's going on in the US," Hayward said, referring to the shale boom that has driven a 60% increase in US crude output since 2008. But he asked: "When US supply peaks, where will the new supply come from?"
Russian future production from untapped resources in the Arctic and the vast shale reserves of Siberia are under threat because of sanctions, Hayward said.
"Because of financial sanctions, the big gorillas [major oil companies] are going to start cutting their activities," he added.