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US denies ExxonMobil waiver on Russia

Supermajor says it 'understands' statement from US Treasury Secretary

The US will not make an exception for American companies, including oil major ExxonMobil, seeking to drill in areas prohibited by US sanctions on Russia, Treasury Secretary Steven Mnuchin said on Friday.

The unusually direct statement served to clarify that the US would maintain a tough stance on sanctions against Moscow.

"In consultation with President Donald J Trump, the Treasury Department will not be issuing waivers to US companies, including ExxonMobil, authorising drilling prohibited by current Russian sanctions," Mnuchin said in a statement.

The US and European Union imposed economic sanctions on Russia over its annexation of the Crimea region in 2014 and its role in the conflict in eastern Ukraine. The sanctions forced ExxonMobil, the world's largest publicly traded oil producer, to wind down drilling in Russia's Arctic in 2014.

"We understand the statement today by Secretary Mnuchin in consultation with President Trump," ExxonMobil spokesman Alan Jeffers said.

ExxonMobil had asked for and received in 2015 and 2016 waivers to operate a joint venture with Russian oil producer Rosneft in Russia. EU sanctions do not keep European oil companies from operating in Russia, a point of annoyance for ExxonMobil.

The Wall Street Journal reported this week that ExxonMobil had in recent months applied for a Treasury Department waiver to drill with Rosneft. Jeffers said Exxon had not applied for waivers from Treasury since Trump took office.

Any such request would have drawn attention because ExxonMobil's former chief executive, Rex Tillerson, is now US secretary of state. Under his leadership, ExxonMobil lobbied Congress on Russia sanctions, and Tillerson opposed sanctions against Russia in 2014, saying they would be ineffective.

US lawmakers are investigating possible ties between some Trump campaign aides and Moscow. Republicans in Congress as well as US allies in Europe are anxious about any sign that the Trump administration might ease some of the sanctions imposed on Russia.

During his confirmation hearing in January, Tillerson said he never personally lobbied against sanctions and that he was not aware of ExxonMobil directly doing so, later acknowledging that he spoke to former US Treasury Secretary Jack Lew regarding gaps between American and European sanctions on Russia.

Tillerson has pledged to recuse himself until the end of this year from any matter involving ExxonMobil unless he is authorized to participate. He also has until early May to sell his ExxonMobil stock.

The refusal is unlikely to affect ExxonMobil's bottom line, as it has not been able to operate in Russia for several years, but it does hinder its growth potential.

"It's good from a regulatory perspective as it provides clarity to US companies, but it's also great from a foreign policy perspective," Edward Fishman, a fellow at the Atlantic Council think tank and former State Department official during the Obama administration, said of Mnuchin's statement. "Any uncertainty about the future of sanctions scares our allies and encourages Russia to prolong its aggression in Ukraine."