British energy group Independent Oil and Gas (IOG) has committed to sell gas produced from the Elgood field in the North Sea to Gazprom’s UK-based trading and marketing arm for two years, in a deal that now stands at odds with mounting pressure to sever ties with Russian companies.
The Elgood field is operated by IOG and CalEnergy Resources, with both companies holding a 50% stake in the project. The site, which holds gas reserves estimated at around 14 billion cubic feet, is set to begin production in the next few weeks and will reportedly run until the field reaches its economic limit in 2031.
While the deal to sell Elgood-produced gas was struck months before the Ukraine invasion, the agreement still puts IOG in contrast to other Western oil energy majors, who are beating a hasty retreat from Russian operations as news of continued attacks on Ukraine pours in.
Efforts to weaken and isolate Russia are seeing Western governments call on companies to cut business ties with the nation, and put a halt on further investments into its projects. Over the weekend, energy majors BP, Shell, and Equinor announced their exits from joint ventures in Russia, with shares of the companies taking a hit as a result.
MPs are urging other businesses to follow in the footsteps of these energy majors, and British Business Secretary Kwasi Kwarteng said on Twitter that the invasion was “a wake up call for British businesses with commercial interests in Putin’s Russia”.
Similarly, shadow energy secretary Ed Miliband said: “British companies that are profiting from investments in Russia should similarly consider their positions. We should do everything we can to isolate Putin and his regime.”
While IOG’s deal is expected to go ahead, the London group has said that if Gazprom and its UK subsidiary is subject to more sanctions, it would “expect to sell this gas to another UK offtaker”.