putin rosneft oilAlexei
Nikolskyi/RIA Novosti/Kremlin/Reuters

The Treasury Department says it won’t issue Exxon Mobil a waiver
to work in Russia.

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

Earlier this week, the Wall
Street Journal’s Jay Solomon and Bradley Olson
reported that
Exxon Mobil Corp. applied to the Treasury Department for a waiver
from sanctions on Russia in an effort to restart its joint
venture with state oil company PAO Rosneft. Specifically, to
proceed in the Black Sea.

The Obama administration previously issued an executive order
that imposed sanctions on Russia in response to the country’s
actions in Ukraine. Part of the
sanctions leveled on Russia include
the prohibition of
technology transfers in Russian energy projects in the Arctic,
Siberia, and the Black Sea. Sanctions also prohibit dealings with
Rosneft CEO Igor Sechin.

Throughout the campaign season, US President Donald Trump
advocated improving relations with Russia. After his election,
analysts believed that there was possibility that the sanctions
imposed on Russia over Ukraine
could be lifted,
which theoretically would have major
implications for energy. Russian president Vladimir Putin was one
of the first leaders to
publicly send
his congratulations after Trump’s win.

However, the prospects of improving relations between Russia and
the US have somewhat faded recently following the
US strike on Syria
and the launching of a Congressional
investigation into whether there were ties between Trump aids and

US Secretary of State Rex Tillerson is the former CEO of Exxon.
He has close personal ties with Russia, has struck several major
deals with Rosneft in the past, and received the Order of
Friendship award from President Vladimir Putin in 2013.

The Journal reported that he is recusing himself from matters
involving Exxon for two years, according to the Journal.
Moreover, it’s unclear whether the request to the Treasury
Department came before or after Tillerson joined the

Exxon and Rosneft
signed a landmark deal
in 2012 under Tillerson’s leadership
to explore Russia’s arctic and its portion of the Black Sea, as
well as drill in Siberia.

One key casualty of the sanctions on Russia ended up being the
Kara Sea inside the Arctic Circle (not to be confused with the
Black Sea).
Back in September 2014
, Rosneft discovered oil there with
Exxon, however, due to the sanctions, they could not continue the
landmark joint exploration. This proved to be problematic for
both parties: Rosneft does not have the technological ability to
drill in cold offshore conditions by itself, while Russia was
Exxon’s second-biggest exploration area at the time.

Tillerson’s close relationship with Russia and Putin has
led to speculation that as secretary of state, he
could push for sanctions on Russia to be lifted — allowing
Exxon’s Arctic agreement with Rosneft, reported to be worth $500
billion, to proceed. Meanwhile, the head of the Exxon’s
operations in Russia, Glenn Waller,
said last April
 that the company will return to its
joint project with Rosneft once sanctions against Moscow are

In his confirmation hearing, Tillerson
, “I never lobbied against the sanctions. To my
knowledge, Exxon Mobil never lobbied against the sanctions. Exxon
Mobil participated in understanding how the sanctions were going
to be constructed. And was asked and provided information
regarding how those might impact American business interest.”

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