Scottish Government threatens to stop funding US oil firm over Russia exports

The Scottish Government has threatened to withhold funding to a US oil multinational over its exports to Russia.

The development follows a report by The Ferret revealing Baker-Hughes exported drilling equipment worth £21m from Montrose to Russia three months after ministers called on Scots businesses to cease trading with the country.

There is no suggestion that the firm broke the law or any international trade sanctions, but the transaction went ahead in spite of the Scottish Government’s appeal.

Critics claim that equipment supplied by western companies to Russia’s oil and gas sector has helped to support its economy and war efforts in Ukraine in the face of international sanctions.

Following our report last month, the Scottish Greens’ MSP, Ross Greer, wrote to the Scottish Government asking for a review of grants awarded by its business arm, Scottish Enterprise, to ensure grantees are not “profiting from the actions of human rights abusing dictatorships”.

The Scottish Government replied to Greer in a letter by deputy first minister, John Swinney, who said he had “personally raised the case of Baker Hughes with the chair and chief executive” of Scottish Enterprise.

Scottish Enterprise is an arm of the Scottish Government. The grants it issues send a message. It should always set the highest ethical standards, in line with the government’s own robust position.

Ross Greer MSP, Scottish Greens.

Swinney added: “The £4.9m research and development grant referred to in the Herald (Ferret) article was approved in April 2018 by Scottish Enterprise, pre-dating the current conflict in Ukraine, and £4.8m of the grant had been paid before March 2022.

“I understand that there remains a small final instalment of funding due to Baker Hughes for a training grant, which was part of the package of support approved in 2018.

“I have been assured by Scottish Enterprise that, even though the original approval pre-dated the invasion of Ukraine, this final amount will not be paid to Baker Hughes unless both the legally binding sanctions regime and the Scottish Government’s position towards Russia are being complied with.”

Greer welcomed Swinney’s intervention and argued that public money should be withheld from companies which continued doing business with Putin after the Russian invasion began.

He said: “Scottish Enterprise is an arm of the Scottish Government. The grants it issues send a message. It should always set the highest ethical standards, in line with the government’s own robust position. That means showing solidarity with people in Ukraine by taking a zero-tolerance approach to any company trading with human rights abusing regimes, like the one in Russia.”

A Scottish Enterprise (SE) spokesman said: “SE is fully compliant with all of the legal and discretionary measures regarding support for companies which trade with Russia. Our due diligence process is designed to uncover any potential breaches and funding is not provided where such breaches are found.”

A Baker Hughes spokesperson said: “Baker Hughes reiterates the statements made previously that our last shipment out of Montrose was in June 2022, that we are compliant with all applicable sanctions and that the company and Scottish Enterprise remain in close communication and alignment. As stated, Baker Hughes remains steadfast in its condemnation of violence and its grave concern with the war in Ukraine.”

However, Razom We Stand – an organisation based in Ukraine calling for an embargo on Russian fossil fuels and an end to investment into the country’s oil and gas companies – argued that Scottish Enterprise should not give Baker-Hughes the final instalment of the grant.

Svitlana Romanko, founder and director of Razom We Stand, told The Ferret: “We insist that the Scottish Government stand firmly on the right side of history and withhold support and Scottish Enterprise funding from Baker Hughes, and bar them or anyone else propping up the Russian war machine from receiving any forms of governmental support.”

Photo thanks to iStock and Smederevac.