The oil industry is raising alarms over a Russia sanctions bill making its way through Congress that would restrict U.S. energy companies from operating in the same country as a company from the Russian Federation, which the industry says would make U.S. businesses less competitive.

"This has far-reaching impacts to a variety of companies and industries," Jack Gerard, president and CEO of the American Petroleum Institute, said Friday. "It has the potential to penalize U.S. interests across the globe and advantage Russia and other countries or entities."

Gerard said the provision known as "Directive 4" in the Russia Sanctions Review Act of 2017 would bar U.S. companies from global projects anywhere that included a Russian company at any level.

"For example, if the United States is involved in any energy project across the globe, according to the expanded scope of the sanctions, the involvement of a Russian entity at any level on that project could exclude U.S. companies from partnerships and allow competitors to gain competitive advantages," he said.

The bill would widen the current set of sanctions that already impose restrictions on U.S. oil seeking to operate inside Russia to a global ban. Sanctions experts say the bill would give rivals such as China a leg up in securing major energy development deals while pushing U.S.-based companies like Exxon Mobil out.

"China has not sanctioned Russia and therefore is free to partner with Russian firms and participate in profit sharing from deepwater exploration and production," said Richard Sawaya, vice president of National Foreign Trade Council and director of USA Engage.

"Even if the Russians didn't swoop in to claim additional exploration blocks in the absence of American competition, Sinopec and other Chinese companies would," he said.

Large global oil projects typically include many partners from around the world to offset the steep costs involved in, for example, offshore energy projects.

The bill, introduced by Sen. Lindsey Graham, R-S.C., was passed by the Senate last month and is expected to be taken up in the House as soon as next week, according to industry sources, who are raising the issue as a top priority when Congress returns from the July 4th holiday recess.

API and other groups are raising alarms about the devastating impact the bill would have on jobs, energy security, and U.S. competitiveness.