Exxon Is Not Getting Permission to Drill in Russia from the US

On Friday, the Secretary of US Treasury, Steven Mnuchin said that the United States is not going to make exception for any companies based in America, which includes Exxon Mobil Corp., which is seeking permission to drill in US sanction prohibited areas on Russia.

This direct statement clarifies that the stance of United States on sanctions against the Russian capital are really tough.

These economic sanctions were imposed by the European Union and United States on Russia over their Crimea region annexation in 2014 and their role in the eastern Ukraine conflict. Due to these sanctions, the world’s largest oil producer and a publicly traded company, Exxon may pull out of the Arctic region of Russia in the same year.

Exxon asked for waivers in 2015 and 2016 to operate in a joint venture with Rosneft, a Russian Oil Producer and received them as well. The sanctions by the European Union don’t keep oil companies of European origin from operating in the country, which is annoying to Exxon.

The WSJ reported that Exxon had applied for waiver in the recent months from Treasury Department to drill in the joint venture. Exxon spokesperson Alan Jeffers said that there were no applications of waivers since Donald Trump’s election win.

Exxon’s former CEO, Rex Tillerson is now the Secretary of State for US and such kind of request would draw attention. Under Rex’s command, Exxon had lobbied Congress on the sanctions of Russia and he opposed these sanctions in the year 2014 saying that they would be rendered ineffective soon.

Lawmakers in the US are investigating the possibility of ties between campaign aides of Trump and Moscow. Republicans currently in Congress as well as allies of US in Europe are anxious to know whether the administration of Trump would ease some sanctions that were imposed on Russia.

Rex Tillerson has vowed to remove himself completely from Exxon Mobil unless he has the authorization to do so. He is also going to sell his stock in Exxon Mobil by May.

Companies in the US file applications frequently to the Treasury for permission to do activities that are barred due to sanctions. The government then weighs the application based on interest of national security and other factors.

The refusal to their application would affect the bottom line of Exxon Mobil as they haven’t been able to operate in Russia for so long, which hinders their potential of growth.

Treasury doesn’t comment on license applications publicly, but the statement by Mnuchin is just to clarify the country’s stance on the sanctions against Russia while American allies are looking for some kind of clue into US policy, said observers.

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