STATE DEPARTMENT - Oil giant ExxonMobil has asked the Trump administration for an exemption from U.S. sanctions against Russia, so it can resume drilling around the Black Sea with a Russian partner, according to U.S. news reports Wednesday.
The request likely will receive extra scrutiny from U.S. officials because the deal between Exxon and Rosneft, the Russian state-owned energy company, was negotiated by the company’s former chief executive officer, Rex Tillerson, now the U.S. secretary of state.
Tillerson forged a landmark joint-venture deal with Rosneft worth hundreds of billions of dollars in direct talks five years ago with Russian officials including the Kremlin leader, President Vladimir Putin.
Drilling in Arctic
The Rosneft-Exxon team had begun drilling in the Arctic’s Kara Sea, but that work stopped when former President Barack Obama imposed sanctions against Moscow in 2014, following the Kremlin’s annexation of Crimea from Ukraine. The energy group also had agreed to look for shale oil in western Siberia and in the deep waters of the Black Sea, the area where Exxon is now seeking a waiver from sanctions.
Neither the Treasury Department nor Exxon would comment on the company’s request, first reported by The Wall Street Journal. A State Department spokesman said Tillerson pledged to recuse himself from any matters involving Exxon for two years after he took his Cabinet-level position, and added that the secretary is not involved with any decision by any government agency affecting Exxon.
Tillerson retired from Exxon late last year, after it became known that Trump would name him to head the State Department.
The Associated Press reported that ExxonMobil, which is based in Irving, Texas, filed documents in 2015 and 2016 disclosing that it had received three licenses from the Treasury Department, through its Office of Foreign Assets Control, authorizing the company to conduct “limited administrative actions” with Rosneft.
Exxon has said that it and its investment properties in Russia comply with all aspects of the U.S. sanctions program. The original Exxon-Rosneft drilling project in the Arctic was halted by a U.S. order prohibiting American companies from transferring advanced technology used to drill offshore and in shale formations.
The head of Rosneft, Exxon’s partner, also was personally blacklisted by the U.S. action.
Exxon estimated in 2015 that its potential losses from the Rosneft venture could amount to $1 billion. In his corporate role, Tillerson spoke out against the U.S. sanctions in 2014, declaring such tactics are usually ineffective and warning they could cause “very broad collateral damage.”
Tillerson and Russia
A year earlier, before Russia annexed Crimea and the United States responded with sanctions, Putin personally honored Tillerson by naming him a member of Russia’s Order of Friendship. After the 2016 election, when the Trump team first considered Tillerson for the top U.S. diplomatic post, Capitol Hill lawmakers including Republican Senator Marco Rubio began questioning whether Tillerson was too close to Putin to serve effectively as secretary of state.
Amid the continuing controversy over Russia’s involvement in last year’s political campaign, as reported by the FBI and U.S. intelligence agencies, Tillerson became the first senior member of the Trump administration to visit Moscow. He traveled there last week for talks with Foreign Minister Sergei Lavrov and with Putin. The meetings were reported to have been dominated by U.S-Russian tensions over Syria.
The environmentalist organization Greenpeace USA reacted quickly, calling on the Trump administration to reject Exxon’s request.
“If the Trump administration allows Exxon to move forward with extreme offshore oil drilling in Russia despite sanctions, the United States Congress must resist. Removing barriers to Exxon drilling in the Russian Black Sea with a state-controlled company like Rosneft would not only jeopardize global progress on climate change and provide momentum for a similar waiver in the Russian Arctic, it would also send a message to Russia that it can intervene in any country, including the United States, with no consequences. Members of Congress must stand up for the separation of oil and state.”
“We are extremely concerned that Rosneft’s control of a major U.S. energy supplier could pose a grave threat to American energy security,” the six senators wrote in an April 4 letter to the U.S. Treasury secretary.