Why Russia matters more than Canada or Mexico

As to this specific question, none of the neighbors are not able to compete with Russia. It is true that Russia, in General, is not an important trading partner of the United States. It does not go to any comparison with Mexico and Canada, with our partners in the North American free trade agreement (NAFTA). But when it comes to one very important and politically very important sector of the economy, Russia beats them both. She has become a reliable partner, despite three years of sanctions, ongoing recession and the decline in oil prices, which hit its revenues.

If you don’t consider Boeing aircraft company, the largest constituent part of the Russian import from the United States is drilling equipment for the oil and gas industry — such data are the Department of foreign trade Bureau of the U.S. census (U.S. Census Bureau). Apparently, it is business cooperation, the Senate will be forced to consider his new bill on sanctions against Russia, calling for the introduction of extraterritorial sanctions against those companies which cooperate with Russian energy companies in different parts of the world.

The Wall Street Journal this week reported that companies such as Exxon and Chevron is actively lobbying against the new bill. That is why, the speaker of the U.S. house of representatives Paul Ryan (Paul Ryan) was sent back to the Senate. According to the Bureau of census of the U.S. population, last year Russia spent 391,7 million dollars for the purchase of American drilling equipment for the oil and gas industry. Some of this equipment is subject to sanctions — basically we are talking about deep-water Arctic projects and shale gas. Any technology and any equipment used for fracking, is also prohibited.

Exxon is involved in a joint venture with a total investment of 720 million dollars for the search of hydrocarbon deposits in the Kara sea in the Russian Arctic. As a result of sanctions work on this project is not conducted for the past three years.

Russian imports of oil and gas equipment is kept steadily at a certain level in the past 10 years, despite the economic difficulties. It increased to 264 million dollars in 2015, but this is less than the figure at 458 million dollars in 2008 when a barrel of oil cost $ 150. However, Russia is closer to its peak value than many other trading partners in this area.

Mexico is in a much worse position. It imports turned in the opposite direction. Last year the Mexican energy company purchased the American oil and gas drilling equipment at 287,2 million dollars, less than in 2015 (920,9 million dollars), less than in 2014 ($1.2 billion) less than in 2013 ($1.4 billion) less than at peak oil prices in 2008 (487 million dollars).

Purchase Canada be reduced, and, in addition, it is not such a large market as Russia. According to the census Bureau United States, the amount of foreign purchases of its companies last year (388,5 million dollars) was slightly smaller than the Russian indicators. In 2015, Canadians spent on the purchase of such equipment 683,5 million dollars, and in the previous four years this figure reduced by $ 1 million. Some of the figures may be attributed to economic cycles and commissioning of new fields. Other countries involved in energy production, also purchased less equipment in the past year.

The Saudis imported less equipment than the Russian. They are purchased in the United States and drilling equipment to 176,8 million dollars is less than in 2015 (377,3 million dollars), and much less than the peak in 2008 ($540 million).

The United Kingdom last year imported drilling equipment for the oil and gas industry in the amount of 160,5 million dollars, far less than in 2015 (281 million dollars) and less than the peak level of 2008 (619,7 million dollars). The United Kingdom is one of the largest producers of natural gas in the European Union.

United Arab Emirates, the largest exporter of liquefied natural gas, last year bought oil and gas equipment on 219,2 million dollars. This is three times less than the peak rates in 2008 (795 million dollars).

What can you say about Brazilians, but also on oil and gas that they extract on their underwater horizons under salt layers off the coast of Rio de Janeiro and Sao Paulo? Due to low oil prices, but also because of corruption scandals wallets of the state oil company Petrobras were tightened, and eventually Brazil in 2016, the imported equipment in the amount of 183,3 million dollars, less than in 2015 (292,6 million dollars), and less peak performance a decade ago (957 million dollars), that is, 2007, when he started to develop the new fields.

These figures indicate that American oil companies began to rely on Russia as a reliable buyer. The business will have a much better feel if imposed against Russia sanctions will be lifted. But the business will be a lot worse if sanctions are imposed on Russian energy companies around the world, — namely, such a goal is contained in the June Senate bill, adopted by an overwhelming majority. In this case, American companies are forbidden to sell them certain types of equipment as long as Congress does not vote for the lifting of sanctions. Taking into account anti-Russian rhetoric in Washington, it’s unlikely without active pressure from the oil lobby.

Tightening position in relation to Russia, the Senate corners not only trump, but some corporations. As shown by the recent publication in the Wall Street Journal, some of them are beginning to lose patience. This is because American oil companies in theory can compete with Russia in Europe, if the Russians will be there under sanctions. But, on the other hand, these same companies will undoubtedly be much more difficult to do business in Russia, a country that in the last year behaved better towards them than Mexico or Canada.