OREANDA-NEWS. New sanctions on technology sales to the Russian oil and gas sector could make it harder to maintain the rate of production from depleting West Siberia brownfields, Fitch Ratings says. This is because the enhanced recovery techniques used in these fields are similar to those used for shale oil extraction, one of the target areas for the sanctions.

In the medium term the measures are also likely to delay some of Russia's more ambitious projects, particularly those on the Arctic shelf. If the sanctions remain for a very long time they could even undermine the feasibility of these projects, unless Russia can find alternative sources of technology or develop its own.

Much of the impact will depend on the exact text of the sanctions and the way they are applied. The EU's press release of 29 July refers to the export of energy-related equipment to Russia requiring prior authorisation before export - and that this will be refused if the products are destined for deep water, Arctic or shale oil production. The US has announced similar sanctions. The impact on West Siberia brownfields will therefore depend on whether they will be covered by the definition of "shale oil" and how long any permitting processes take.

As West Siberian and other brownfields are maturing, major Russian oil companies are moving into more difficult parts of the existing formations. For example, Gazprom Neft, an oil subsidiary of Gazprom, is increasingly relying on wells with horizontal drilling, which accounted for 42% of all wells drilled in 2013 compared to 4% in 2011, and multi-stage fracking, which was used in 57% of high-tech wells completed in 2013, up from 3% in 2011.

Sanctions that make it harder for Russian companies to obtain the latest equipment may therefore harm their ability to successfully develop harder-to-reach deposits, effectively shortening the economic life of brownfields.

But Russia's deposits of unconventional "shale" oil and those located in the Arctic seas have significant potential. This has enabled major Russian oil companies to set ambitious long-term targets for 2020 and beyond.

Russian companies have limited experience in working with non-traditional deposits that require specialised equipment and "know-how" and are increasingly reliant on joint ventures with western companies to provide technology and equipment. All these joint ventures could be hampered by the sanctions. Companies involved in these ventures include the western Exxon Mobil, Royal Dutch Shell and BP, oil service companies Schlumberger, Halliburton and Baker Hughes, and Russian Rosneft, Gazprom Neft and to a lesser extent LUKOIL, Novatek and Tatneft.

The measures announced by the EU as Fitch understand them should not have a direct impact on the development of gas fields and construction of planned liquefied natural gas (LNG) facilities in the Far East between Rosneft and Exxon Mobil, and those in Russia's Yamal peninsula between Total, China's CNPC and Novatek. But Fitch believe the new sanctions - and the potential for further measures - will reduce western companies' appetite for involvement in new projects.