The Sochi Olympics Could Present Global Energy Complications

Let's face it: Instead of focusing primarily on the athletes and what could be a great upcoming Winter Olympics to be held in Sochi, Russia, much of the recent media headlines are instead laser-focused on the "potential" for a terrorist plan that could be carried out by suicide bombers. So above anything else, the safety of all participants, spectators and locals in Sochi should be paramount.

With that said, Russia is in dire need for foreign direct investment (FDI) to help its tired energy sector, a sector that has not seen the necessary funds to modernize to meet today's demands. That means Russian oil companies such as Rosneft and Gazprom (NASDAQOTH: OGZPY  ) also stand to either medal or not based on the security of Sochi next month. 

Take ConocoPhillps (NYSE: COP  )  for instance, which has sold its roughly 20% stake in Lukoil in 2012. Although, it remains a 50% partner on Rosneft's Polar Lights Venture, an oilfield project just outside of Moscow. ConocoPhillips is not the only US oil giant in Russia though.

In what was perhaps a sign of willingness to go anywhere to boost oil production, ExxonMobil (NYSE: XOM  ) , which through its Exxon Neftegas subsidiary, operates and owns 30% of one of the largest FDI spending projects in Russia (the upstream Sakhalin-1 in Far East Russia), also announced a few weeks back a new JV with Rosneft to explore for a massive oil find in the Arctic Ocean. It also now has plans to drill horizontal wells and boost flow from older wells in Western Siberia. So if anything God forbid happens in Sochi, ExxonMobil's recent expansion into Russia may come into question by investors uneasy about the company's commitment to the region despite political frailty currently between the U.S. and Russian governments.

Also, any issues that result from the lack of security in Sochi, may also help boost the speed of the shale revolution in Europe, a continent that has been relying a lot on Russia's exported gas for energy. If that latter scenario does unfold post Sochi, companies like Chevron (NYSE: CVX  ) and Royal Dutch Shell could be big beneficiaries from any move to more quickly develop shale assets in the region. Keep in mind that Chevron signed a Memorandum of Understanding (MOU) in late 2013 with Poland's state-run gas firm PCNiG to develop shale gas from Poland's south-eastern locale. This is potentially a very big move for Chevron considering Poland does get much of it's gas from Russia. 

One company that could make more headlines that the Sochi Olympics in 2014

There’s a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it’s one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2809910, ~/Articles/ArticleHandler.aspx, 8/29/2015 5:24:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Licata

John Licata is the Founder & Chief Energy Strategist of Blue Phoenix Inc. You can follow John on Twitter @bluephoenixinc

Today's Market

updated 20 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:01 PM
COP $46.82 Up +0.95 +2.07%
ConocoPhillips CAPS Rating: *****
CVX $80.43 Up +2.79 +3.59%
Chevron CAPS Rating: ****
OGZPY $4.42 Up +0.09 +2.08%
Gazprom OAO (ADR) CAPS Rating: ****
XOM $75.07 Up +0.22 +0.29%
ExxonMobil Corp CAPS Rating: ****