The world’s biggest oilfield services provider has no plans to leave Russia. After an “outstanding” year, its shareholders are raking in the cash.

Major oil companies are household names. Oilfield service providers? A little less so. But it’s these companies that make it possible for the Rosnefts and Exxons of the world to extract oil in the first place. They do much of the actual work, locating deposits, drilling wells, and managing reservoirs to boost production. Tech and expertise from big Western oilfield service providers is partly responsible for making Russia the third-largest energy producer globally in 2021. That industry, and one company specifically, helps finance and fuel Russia’s war on Ukraine even as it worsens the climate crisis.

Since Vladimir Putin began the war in February 2022, some major oilfield service providers have joined a list of international corporations pledging to exit Russia. Baker-Hughes and Halliburton have both sold off their Russian interests to local companies. Schlumberger NV (SLB), however, the world’s largest oilfield contractor, with headquarters in the US and Europe, is still operating in Russia.

Global Witness can now report that SLB is hiring for hundreds of positions inside Russia—as many as it was just before the invasion of Ukraine. There is no indication that SLB will ever opt to leave the country. That leaves its shareholders—top American asset managers among them—implicated in the continued production of oil that’s funding Russia’s attacks on Ukraine.

Diamond drills

SLB Russia’s customers have included some of the biggest names in the industry - Chevron, Total, Lukoil, and Rosneft among them. Its tech has helped Russian companies exploit oil and gas reserves they couldn’t have accessed alone. From specialized diamond drill bits to ‘intelligent’ well designs, SLB boasts that it helps Russian companies drill more oil for less money.  

Former Deputy Minister of Energy of Russia Vladimir Milov told Global Witness he estimates that if American oilfield service expertise were not available to Russian companies, well productivity might fall by 20%.

Beyond these bread-and-butter contracts, SLB has worked to embed itself further in Russia’s political and academic institutions. Long before the war, it signed “strategic agreements” with universities and regional administrations across the country. Opened in 2008, its $110m Siberian training centre, one of three globally, houses hundreds and features bells and whistles like a virtual reality drilling rig.

 In other words, the company is entrenched. And unlike its rivals, SLB has made no move to leave Russia after it invaded Ukraine.

‘Immense concern’

Russia’s invasion of Ukraine on February 24, 2022 precipitated a belated exodus of some multinational companies working there, including within the oil and gas industry.

“We have watched with immense concern as the conflict in Ukraine has escalated,” said Olivier Le Peuch, SLB’s CEO, in March. He added, “We… have decided to immediately suspend new investment and technology deployment to our Russia operations.”

On SLB’s Q2 earnings call in July, Le Peuch was prodded about his expectations for the company’s operations in Russia. The CEO reiterated his earlier statement, adding, “However, our structure gives us the flexibility to have operations in country in full compliance with international sanctions.” (SLB has run afoul of sanctions in the past, including in 2015, when it pled guilty and paid over $232 million to the US for facilitating trade with Iran and Sudan. Global Witness does not allege that SLB is violating sanctions in Russia).

Russia has every reason to keep SLB around. “It would have a huge impact” on the country’s oil production if SLB were to leave, Milov told Global Witness. Indeed, after the invasion, the Russian government published a list of Russian-registered corporations including SLB. A decree later published in November forbade companies on the list from selling their Russian subsidiaries without Kremlin permission.

SLB rivals Baker-Hughes and Halliburton, which were also named in the list, were able to sell off their Russian businesses. But in January 2023, Reuters reported that SLB had begun scooping up new contracts in Russia that its peers could no longer access.

And as of early March, SLB was advertising 215 jobs in Russia, in locations from St. Petersburg to Yuzhno-Sakhalinsk. These vacancies had been posted in February and March, indicating that the company is actively hiring hundreds of positions, including for its Russian subsidiaries. Just before the invasion, in February 2022, SLB was advertising 232 jobs in Russia. The scale of its current vacancies indicate that the company’s recruitment needs have remained virtually unchanged since the war began, and that SLB is continuing work in Russia as usual. 

SLB seems to have judged that the risk of staying is worth the reward.

The company did not respond to multiple requests for comment for this article.

Reward for whom?

SLB drills wells and visualizes vast underground deposits of oil and gas, but its real business is making money for its shareholders.

2022 had been “an outstanding year,” Le Peuch told investors in October. The company finished the year on a high note, pulling in $28.1b in revenue that year – a 23% increase over the year before. According to an annual filing with the Securities and Exchange Commission, Russia represented approximately six per cent of this revenue. Strikingly, that is more than the company’s first-quarter report for 2022, issued in April that year, which then estimated that Russia represented five per cent of its global revenues. In other words, Russia was worth more to SLB after it invaded Ukraine.

In all, an estimated $1.69b of SLB’s banner 2022 revenues flowed from keeping Russia’s oil and gas industry afloat. An industry which, in turn, kept financing the war.

SLB’s shareholders include some of the world’s biggest asset managers, according to data from financial data provider Refinitiv accessed on February 8, 2023. They include The Vanguard Group; BlackRock Institutional Trust Co. NA; State Street Global Advisors; and Wellington Management Company, LLP. Norges Bank Investment Management (NBIM), which manages the enormous Norwegian state pension fund, is another top shareholder. Between them, these fund managers then owned $14 billion in SLB stock – just under a quarter of the company.

Global Witness estimates that SLB paid these managers a total of $225 million in 2022 dividends from its operations worldwide. Some proportion of that, the exact amount of which is only known to SLB, can likely be attributed to its activities in Russia. Any dividends stemming from a company’s operations supporting Russian fossil fuels amount to ‘blood money’, as an advisor to Ukrainian President Volodymyr Zelenskyy has said.

A spokesperson for NBIM said, “I regret to inform you that as a general policy we do not comment on single investments.” None of the other asset managers named here responded to Global Witness’s requests for comment.

When Russia invaded Ukraine, most of these asset managers voiced shock and sorrow, saying they were “deeply saddened” (Wellington) and acknowledging the “humanitarian crisis” produced by the war (Vanguard and State Street). BlackRock said on the first day of the war, “We deplore the human toll and tragedy all this may bring.” Yet these companies continue to hold shares in SLB, contributing to its ability to continue abetting Russia’s war efforts. BlackRock has even promised to help Ukraine entice investors into its rebuilding effort – at the same time that it holds almost five per cent of SLB. Ordinary people relying on these asset managers to safeguard their retirement savings have, meanwhile, inadvertently invested in a company critical to Russia’s oil industry.

If a company with SLB’s strategic significance to such a central Russian industry was Moscow-based, it would have been likely sanctioned in a heartbeat. But because its executives flit between Houston and Paris, it remains in business and knee deep in Russian oil. SLB’s presence in Russia and support for the Russian oil industry, Putin’s supreme strategic industry, is undermining Western support for Ukraine.

Western governments should instead tax SLB's post-invasion Russian profits at 100% and redirect them to the green reconstruction of Ukraine.  And asset managers like BlackRock should also contribute, from their profits, a sum equal to SLB dividends they received during the war to Ukraine’s green reconstruction, while providing their customers with fossil-free investment options so that by default people’s assets are sheltered from climate-wrecking companies like SLB.