ST PETERSBURG: Gazprom Neft, the oil arm of Russia's Gazprom, has not been hurt by Western sanctions over Russia's annexation of Crimea but will move away from dollars in its contracts, and redirect oil flows to Asia, if needed.

The company is the first in Russia's oil sector to say it could potentially move away from dollar-based contracts in response to Western sanctions and marks the planning going on in Russian industry to anticipate possible further measures.

But CEO Alexander Dyukov said Western banks were unlikely to stop cooperating with Gazprom Neft and that Western oil majors did not want geopolitical tension to affect their partnerships.

He told reporters the company would step up contacts with Asian lenders and raise money in Russia if borrowing costs rose further in reaction to the sanctions, visa bans and asset freezes which the West imposed on allies of President Vladimir Putin.“As for sanctions, they have not affected the company's business in any way,” Dyukov told reporters at a regularly scheduled briefing in Russia's second city of St. Petersburg, where Gazprom Neft is based.

He suggested Western companies did not want broader sanctions imposed on Russia, but Gazprom Neft would reduce its reliance on the dollar if the West shuts its doors.

“Of course, I have had meetings, contacts with representatives of Western business circles ... In principle, they are not interested in escalation of tensions,” Dyukov said.

Gazprom Neft is exploring for unconventional oil such as that held in shale deposits — a possible source of future oil output growth in Russia — in western Siberia with Royal Dutch Shell.

With the United States seeking to punish Putin for the annexation of Crimea and deter him from seeking control over any more Ukrainian territory, he said the company had broached the idea of dropping the dollar, traditionally the currency of choice for the global energy sector.

“No such task has been set (by the government),” he said. “But ... we have discussed with our buyers the possibility of switching contracts to euros and ... 95 per cent said they are ready.”