ExxonMobil Seeks Waiver to Drill in Russian Waters

 

ExxonMobil is seeking a waiver from the Treasury Department to lift sanctions restricting drilling exploration in the Black Sea. The waiver application first debuted during the Barack Obama administration, but now sits before the Donald Trump administration in a testy time for Russian-American relations.

If the waiver is granted, ExxonMobil will be able to drill (and benefit financially) in tandem with Russian state oil company Rosneft.

Update: the waiver was denied. 

Relations were tense during the Obama years, but a spotlight has turned on the relationship in the wake of Russia’s alleged attempts to influence the United States presidential election. 

The waiver request, reported Wednesday by the Wall Street Journal, would lift sanctions handed to Russia in March 2014 after its annexation of Crimea from neighboring Ukraine. Sanctions were escalated and tightened in July when Russia was linked to shooting down Malaysia Airlines Flight 17 in eastern Ukraine, killing all 298 passengers and crew on board the plane traveling from Amsterdam to Kuala Lumpur.

Even still, ExxonMobil pushed for leniency and pressed for deeper exploration in Russia’s Arctic. The waiver application was first made in 2015, Alan Jeffers, an ExxonMobil spokesman, told the New York Times. And the company hasn't let up. Exxon argues that if it does not start drilling by the end of 2017, it could lose its contractual exploration. And European oil and gas companies, like Italy’s Eni, would be free to take over the work.

“We are going to drill with Eni next year. That is our plan. On the Black Sea,” Zeljko Runje, vice president of Rosneft’s offshore projects, told Russian news media last summer.

European sanctions were also issued as a response to Russia’s invasion of Crimea, but the United States drew a much harder line. ExxonMobil, however, has received minor exemptions to the Russian sanctions, reported Clifford Krauss of the New York Times. The oil giant was given the green light to finish a $700 million project it started in the Kara Sea in the fall of 2014, claiming it wouldn’t be safe to up and leave the project unfinished.

Secretary of State Rex Tillerson’s previous leadership role in ExxonMobil could raise a few red flags if the Trump administration decides to lift the sanctions in the Black Sea. Tillerson, who served as ExxonMobil’s chief executive from 2006 to 2017, has strong business ties with Russian president Vladimir Putin.

In 2011, the two clinched a drilling deal worth $3.2 billion in exploration of the Black Sea and Arctic Ocean. Two years later, the Russian leader tapped Tillerson to join Putin’s Order of Friendship although some, such as David Filipov of the Washington Post, view the invite as relatively trivial.  

In 2014, long before Tillerson even envisioned himself as leader of the State Department, the ExxonMobil CEO said he did not support the sanctions, and understandably so. The then-businessman said he doesn't "find them to be effective unless they are very well implemented comprehensively, and that’s a very hard thing to do.”

Tillerson has, however, been quick to criticize Putin’s policies at times -- particularly Russia’s role in supporting the Syrian government. He has pledged to stay out of any decisions relating to Exxon.

On the heels of the 2014 sanctions, Russia vowed to turn inward and continue to drill, with or without help from European and American oil giants.

“Nobody will just sit and wait,” Ildar Davletshin, a Russian oil analyst, told the New York Times in 2014.

Sen. John McCain (R-Ariz.) and Michael McFaul, former U.S. ambassador to Russia under the Obama administration, both took to Twitter to discuss their discontent with the idea of lifting the Russian drilling sanctions for Exxon. McFaul suggested that if the administration accepted the waiver, then “all that tough talk last week about Russia was just that -- talk.”

MSNBC host Rachel Maddow, who has been one of Trump’s stiffest and most outspoken opponents, also tweeted about the waiver.

Ka-ching! Payout time.https://t.co/fovQGP09AQ

— Rachel Maddow MSNBC (@maddow) April 19, 2017

She may be insinuating that Tillerson stands to benefit financially from sanctions being eased against Russia, or perhaps that Russia will benefit financially and will get this favor in return for influencing the election in Trump's favor. It's hard to tell. An analysis conducted by the Intercept found that Maddow dedicated more than half of her show to Russia over a six-week period.

Image credit: Flickr/Bureau of Safety and Environmental Enforcement BSEE