Sanctions imposed on Friday by the Obama administration threaten to choke billions in joint development agreements between Russia’s OAO Rosneft to drill for Arctic and unconventional oil and gas with ExxonMobil Corp.

The United States and the European Union (EU) earlier this year imposed what were considered modest sanctions against Russia for military intervention in Ukraine (see Daily GPI, March 18). The U.S. Department of Treasury on Friday followed the EU in issuing even more stringent actions. Treasury strengthened existing sanctions and targeted firms operating in Russia’s energy sector.

New Directive 4, according to Treasury, “prohibits the provision, exportation, or re-exportation of goods, services (except for financial services), or technology by U.S. persons or from the United States in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and that involve five listed Russian energy companies: Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft.”

ExxonMobil, the largest producer in the United States, struck a landmark strategic joint agreement with Rosneft in 2011 to explore and develop projects in the Gulf of Mexico (GOM) and the tight oil fields of Texas and Canada, as well as in Russia and other countries around the world (see Daily GPI, Aug. 31, 2011). The companies later forged agreements giving Rosneft access to U.S. and Canada onshore acreage, and the right to acquire an interest in 20 GOM blocks (see Daily GPI, March 11, 2013; April 17, 2012). In addition, the producers have a technology sharing agreement.

Coincidentally, BP plc, headquartered in London but whose biggest operations are in the United States, owns 19%-plus of Rosneft, which is Russia’s third largest operator. Other U.S.-based operators that could be impacted by the Russian sanctions include Chevron Corp. and ConocoPhillips.

ExxonMobil and Rosneft only weeks ago began drilling in Russia’s Kara Sea off the northern coast at the Universitetskaya prospect, which is scheduled to last 70 days. The $700 million well is said to hold 9 billion bbl of oil.

Under the Treasury sanctions imposed Friday, U.S. companies have until Sept. 26 to shut down operations with Russian partners. An ExxonMobil spokesman said the company is “assessing the sanctions.”

The drilling in the Kara Sea is expected to take years to develop before production can begin.

Treasury also has imposed sanctions on U.S. individuals or companies dealing with Rostec, a major Russian technology and defense conglomerate, five state-owned defense technology firms and six Russian banks.

“These steps underscore the continued resolve of the international community against Russia’s aggression,” Treasury Secretary Jack Lew said. “Russia’s economic and diplomatic isolation will continue to grow as long as its actions do not live up to its words.”