By April 24, 2017 0 Comments Read More →

US denies Exxon permission to drill in Russia

Exxon

Exxon will not be granted permission to pursue drilling under current US sanctions against Russia.

Exxon denial part of US stance on sanctions against Russia

The United States will not make an exception for any energy companies looking to drill in areas prohibited by US sanctions on Russia, including global oil major Exxon Mobil Corp.

Treasury Secretary made the rare public comment on Exxon’s licence application Friday.

“In consultation with President Donald J. Trump, the Treasury Department will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions,” Mnuchin said in a statement.

For Russia’s role in the conflict in eastern Ukraine and annexation of the Crimea region, the US and European Union imposed economic sanctions on Moscow.  The sanctions forced Exxon to wind down drilling operations in Russia’s arctic in 2014.

 

“We understand the statement today by Secretary Mnuchin in consultation with President Trump,” Exxon spokesman Alan Jeffers told Reuters.

In 2011, Exxon’s then CEO Rex Tillerson signed a cooperation plan with Rosneft for projects in Russia’s Arctic, Black Sea and Siberia.  At the time, Russian President Putin estimated the venture would ultimately invest as much as $500 billion over decades.

But, progress on the pact was halted in 2014 when the sanctions were imposed by the US and the EU.

In 2015 and 2016, Exxon asked for and was granted three waivers to conduct unspecified paperwork for their joint venture with Rosneft in Russia.  The US Securities and Exchange Commission granted to waivers for what the company called “limited administrative actions.”

 

 

According to a report in the Wall Street Journal, Exxon had recently applied to the Treasury Department for a waiver to drill with Rosneft.  Jeffers said Exxon had not applied for any waivers from Treasury since President Trump took over the Oval Office.

With former CEO Rex Tillerson now the US Secretary of State, any such request would have drawn attention.  As Exxon CEO, Tillerson lobbied Congress on the Russian sanctions in 2014, saying they would be ineffective.

During his confirmation hearing in January, Tillerson denied lobbying against sanctions and says he was not aware of Exxon Mobil directly lobbying Congress.  He later acknowledged that he did speak with former US Treasury Secretary Jack Lew concerning the differences between American and European sanctions on Russia.

Under the sanctions, European oil companies are not banned from operating in Russia.

With US lawmakers investigating possible ties between members of the Trump campaign team and Moscow, Republicans in Congress as well as US European allies are anxious about any sign that the Trump administration may ease some of the sanctions imposed on Russia.

“It’s good from a regulatory perspective as it provides clarity to U.S. companies, but it’s also great from a foreign policy perspective,” Edward Fishman, a fellow at the Atlantic Council think tank and former State Department official during the Obama administration, told Reuters concerning Mnuchin’s statement. “Any uncertainty about the future of sanctions scares our allies and encourages Russia to prolong its aggression in Ukraine.”

 

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