Trump denies Exxon sanction waiver to drill oil in Russia
The Trump administration has rejected ExxonMobil's request for a sanctions waiver to allow it to drill for oil in Russia with Russian state oil giant Rosneft. "The Treasury Department will not be issuing waivers to US companies, including Exxon, authorizing drilling prohibited by current Russian sanctions," said Treasury Secretary Steven Mnuchin. The US sanctioned Russia over its intervention in Ukraine and annexation of Crimea.
Rex Tillerson is the former chairman of oil giant Exxon and has been nominated by Donald Trump as secretary of state (foreign minister). Tillerson was to receive a $180 million cash payout from Exxon if his position was confirmed. The payout replaces 2 million Exxon shares which Tillerson was slated to receive over the next decade as part of his pay package.
American oil major Exxon Mobil has applied to the US Treasury Department seeking a waiver from US sanctions on Russia to allow it to resume its joint venture with Rosneft, a Russian state-owned oil giant. The application was made under the Obama administration. Exxon has reportedly stepped up its efforts for the approval following its former CEO Rex Tillerson's appointment as secretary of state.
Tillerson's appointment as secretary of state was criticized over his perceived close ties with Russian President Vladimir Putin with whom the US shares tensed relations. Tillerson and Putin previously worked together on energy deals despite US sanctions on Russia. Tillerson was the director of Exxon's Russian subsidiary and did business with Rosneft. He received an Order of Friendship state honour from Russia in 2013.
Exxon's original application for waiver to drill in the Black Sea in 2015 was rejected. The latest waiver request will likely face close scrutiny by Congress which is planning to step up sanctions on Russia over its alleged interference in the US election. Congress has also launched an investigation into alleged ties between Donald Trump's campaign and transition teams and the Russian government.
Sanctions were imposed on Russia in March 2014 by the US and its European allies imposed sanctions on Russia following Moscow's annexation of Crimea from Ukraine. The sanctions target Russia's state finances, energy and arms sectors, which are linked to Putin and his powerful aides. Russia's three major oil firms, namely Rosneft, Transneft and Gazprom Neft have all be sanctioned.
The kind of sanctions waivers being sought by Exxon are rarely requested or granted, according to former US Treasury official Hal Eren. In most cases the waivers were only given for safety or environmental reasons, he said. "I don't think they [treasury] would issue a license, especially given the political context in which this takes place," Eren added.