Canada bans services to Russian resources sector

10 June 2022 2 min. read

The Canadian government is banning the export of 28 services to Russia’s oil, gas, mining, and chemical industries.

The services ban includes technical, accounting, management consulting, advertising, construction, transport, and research and development services, among others.

The ban covers Canadian companies and citizens, and does not have a grace period.

The move is part of Canada’s ongoing sanctions program initiated in response to Russia’s invasion of Ukraine. Since the February 24 launch of the invasion, Canada has imposed sanctions on more than 1,070 individuals and entities.

The federal government’s move is more of a symbolic gesture than an action that puts material pressure on the Kremlin. Canada earlier this year banned crude oil imports from Russia, which account for a marginal amount of the country’s oil imports.

Canada bans services to Russian resources sector

The only substantial Canada-based oil services firm with material operations in Russia is Calfrac Well Services Ltd, according to Cole Pereira, an analyst at Stifel. Pereira told The Globe & Mail that the sanctions’ impact on Canadian oil firms would be relatively immaterial even for Calfrac, which last month announced plans to sell its Russian business.

The other services included in the ban are not likely to be provided by purely Canadian firms, or have arrived after most companies took earlier initiative to cut ties with Russia. There are no large international Canadian management consultancies to ban from working with Russian oil firms and the big American firms (McKinsey, Bain, BCG) have already suspended operations in the country. Likewise, the Big Four accountancies have cut ties with their Russian member firms and the Canadian member firms wouldn’t be stepping in to do work in Russia.

The late John McCain once noted that Russia is a “gas station masquerading as a country.” Approximately half of Russia’s federal budget revenues come from oil and gas. Russia’s oil exports allow it to continue waging its destructive campaign in Ukraine, and cutting off buyers is an important avenue to pressure the country into ending hostilities.

The EU’s May agreement to ban Russian oil by sea – and the EU’s largest countries’ agreement to stop importing Russian oil by pipeline – is a material and important sanction. However, the vampiric enthusiasm of India, China, and Turkey to step in and buy higher volumes of discounted Russian oil tainted with the blood of Ukrainian men, women, and children undercuts any such efforts in global collective action.