The U.S. government fined ExxonMobil’s deal with Rosneft

The message on the penalty to ExxonMobil posted on the website of the U.S. Treasury. According to the report, the company and its subsidiaries (ExxonMobil Development Co. and ExxonMobil Oil Corp.) violated §589.201 the sanctions legislation, introduced in connection with the Ukrainian events. This paragraph implies a ban on transactions with the persons from the sanctions list.

Violations involving the company occurred in the period from 14 to 23 may 2014. Then the leaders of the structures ExxonMobil signed eight agreements covering oil and gas projects in Russia. The agreement, according to the U.S. Treasury, was signed with the CEO of “Rosneft” Igor Sechin. The head of “Rosneft” is in the US sanctions list since April 2014.

As told RBC representative of “Rosneft” Mikhail Leontyev, ExxonMobil is always “very closely approached” to all actions in the framework of the sanctions and harmonize them with sanctions lawyers. “I don’t imagine the action Exxon, which had not been beforehand with sanctions lawyers discussed”, — he added.

Leont’ev points to the fact that Igor Sechin, is included in the sanctions list as an individual, but not as Executive Director, as a representative of the Executive body of Rosneft, the American sanctions lawyers, he could sign the agreement. “He spoke not as an individual in its own interests, and as Executive Director of the company, which committed actions that do not fall under sanctions,” — emphasizes the Leontyev.

“All this was free for three years. As we have repeatedly said, the nature of sanctions and their use of the us services are so arbitrary that this case is simply an illustration”, he added.

The representative of ExxonMobil has not yet responded to a request to RBC.

In August 2014, OFAC — sanctions charge of a division of the US Treasury — has clarified that any prohibited transaction involving the individual on the sanctions list — even if the individual acts on behalf of an unlocked structure. OFAC emphasized that American companies do not have the right to conclude agreements, signed by the person from the sanctions list.

The Ministry of Finance of the USA does not specify what kind of agreements between Rosneft and ExxonMobil is involved. However, as reported on the website of “Rosneft”, may 23, 2014 the President of “Rosneft” Igor Sechin and President of ExxonMobil Development Neil Duffin signed an agreement on the renewal of the strategic agreement for the implementation of the project “far Eastern LNG”. The contract provided for the carrying out engineering surveys on land and at sea in the summer of 2014.

Then Sechin and President of ExxonMobil Russia Glenn Waller signed an agreement with a consortium “Sakhalin-1” package of services for drilling, extraction, preparation, transportation, storage and loading of hydrocarbons extracted at the Northern tip of the Chayvo field using the infrastructure of the consortium “Sakhalin-1” in accordance with the license circumstances and the joint Technical framework for the development, noted in the message “Rosneft”. Other agreements or contracts concluded in may between Rosneft and ExxonMobil structures, on the website of “Rosneft” is not reported. At the time of signing of transactions resulting in a penalty, was the head of ExxonMobil Rex Tillerson, now the U.S. Secretary of state.

“In may 2014, ExxonMobil and Rosneft signed an agreement on joint activities for the development of seven subsurface sites located in the Kara, Chukchi seas and in the Laptev sea within the framework of the extension of the term of the strategic cooperation agreement (ExxonMobil share is 33%)”, – stated in the financial statements of ExxonMobil for 2014.

ExxonMobil is a longstanding partner of “Rosneft”, but in 2014, after the European Union and the US imposed sanctions against Russia’s energy sector, the company’s activity in Russia has declined significantly. Pursuant to the sanctions were curtailed work Exxon in the Russian Arctic shelf, the Black sea, and on land in Western Siberia.

In April 2017, ExxonMobil asked the U.S. Treasury to remove under the anti-Russian sanctions joint projects with “Rosneft” and to allow her drilling in the Black sea. The Ministry of Finance after consultation with the President of the United States Donald trump said he did not intend to make exceptions for Exxon.