Exxon stymied on project with Russian oil giant
President Donald Trump’s administration rejects Exxon Mobil’s request for a waiver from sanctions against Russia — punishment for that country’s invasion of Crimea — to resume an oil and gas drilling venture potentially worth hundreds of billions of dollars.
WASHINGTON — The Trump administration on Friday rejected Exxon Mobil’s bid for a waiver from U.S. sanctions against Russia to resume a potentially lucrative oil and gas drilling venture there.
Treasury Secretary Steven Mnuchin said in a statement posted on the Treasury Department’s website: “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.”
The decision further delays what was believed to be a blockbuster oil and gas project involving Exxon Mobil and Russian oil and gas giant Rosneft. The plan was to take Exxon Mobil’s cuttingedge drilling and exploratory know-how and apply it to undeveloped fields in the Russian Arctic and deepwater regions of Russia’s Black Sea, as well as shale deposits in Siberia.
At the time of the deal in 2011, Russian President Vladimir Putin estimated investments of as much as $500 billion over a span of decades.
But after Russian troops invaded the Crimea region of Ukraine, former Presi-
dent Barack Obama placed sanctions on Russia that blocked Exxon Mobil’s project and those of other U.S. companies. In 2015, Exxon Mobil filed an application with the Treasury Department for a waiver from those sanctions, one that remained active after Trump took office in January and that the company periodically checked up on, according to a person with knowledge of the situation.
“We understand the statement today by Secretary Mnuchin in consultation with President Trump,” Exxon Mobil spokesman Alan Jeffers said in a statement Friday. “Our 2015 application for a license under the provisions outlined in the U.S. sanctions was made to enable our company to meet its contractual obligations under a joint venture agreement in Russia.”
The question of whether Exxon Mobil would be allowed to resume its venture in Russia comes as the Trump administration is under increasing scrutiny over its ties to Russia. FBI Director James Comey told Congress last month that agents were investigating Russian hacking allegedly aimed at influencing the presidential election and whether members of Trump’s campaign team might have been in contact with the perpetrators.
In response to a Wall Street Journal story Wednesday on Exxon Mobil’s bid for a waiver from sanctions, Sen. John McCain, R-Ariz., who has raised repeated questions on the Trump administration’s ties to Russia, tweeted, “Are they crazy?”
The 2011 deal with Rosneft was signed by Secretary of State Rex Tillerson while he was CEO of Exxon Mobil. Two years later, in 2013, Putin awarded Tillerson Russia’s highest honor for a foreigner, the Order of Friendship.
But since taking over the post of the top U.S. diplomat in January, Tillerson, who promised to recuse himself from matters involving his former company for two years, has taken a tough tone on Russia. In response to the Syrian military’s use of chemical weapons against civilians, Tillerson said Russia was “either complicit or incompetent” after promising to contain the chemical weapons program of Syrian President Bashar al-Assad.
While Exxon Mobil sits on the sidelines, Italy’s Eni continues to explore in Russia’s Black Sea. That fact drew attention from Jeffers, the Exxon Mobil spokesman, who in his statement pointed out that “competitor companies are authorized to undertake such work under European sanctions.”