US Treasury rejects Exxon Mobil request to drill in Russia

Treasury Secretary Steven Mnuchin said in a statement on Friday: "In consultation with President Donald J Trump, the Treasury Department will not be issuing waivers to USA companies, including Exxon, authorising drilling prohibited by current Russian sanctions". Former Exxon CEO Rex Tillerson hammered out the deal with Rosneft, a state-owned oil company, in 2012.

Quoting a State Department spokesman, WSJ reported that Mr Tillerson has recused himself from any matters involving Exxon for two years, and won't be involved with any decision made by any government agency involving his former employer during this period.

Exxon also argued that rival oil companies in Europe were engaged in drilling in that region.

Exxon under Tillerson opposed Obama administration sanctions on Russian Federation, arguing they were not properly issued.

The drilling venture was blocked when the USA imposed sanctions on Russian Federation in 2014. Sanctions were approved by the United States, the European Union (EU) and other countries and global organisations.

"I hope that American companies and the Trump administration will keep these broader implications in mind as they consider any waiver requests, regardless of Exxon's longstanding record of lobbying against these sanctions", he said.

During the campaign, Trump spoke warmly of Russian leader Vladimir Putin and suggested he might be willing to lift some of the sanctions on the country the United States imposed after Russia's invasion of Ukraine and annexation of the Crimean Peninsula.

ExxonMobil's request to return to Russian Federation for oil and natural gas drilling was rejected Friday, according to the Treasury Department.

The oil giant signed a deal with Russia's state oil company in 2011 to drill for oil in the Black Sea and the Arctic. After the 2016 election, when the Trump team first considered Tillerson for the top USA 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.

With the simple submission of a technical sanctions waiver, oil giant Exxon Mobil created a potential PR headache for the White House.

Exxon said in a statement to CBS News that it applied for the waiver because the companies it competes with in Europe are not barred from doing similar work in Russian Federation. "The undeveloped oil fields near the Black Sea are thought to be the most promising in the Russian Arctic".

ExxonMobil has not commented on the report.

"It's good from a regulatory perspective as it provides clarity to US 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, said of Mnuchin's statement.

Rosneft had two-thirds stake in the venture, while Exxon owned a third but was to shoulder the initial exploration costs.

Why are there sanctions on Russian Federation?

  • Leroy Wright