US Sanctions Russia’s Rosneft for Interfering With Its Economic War on Venezuela
Sanctioned Rosneft for working with Venezuela, next is sanctioning those who work with Rosneft
The Trump administration has imposed sanctions on the trading arm of Rosneft, Russia’s state oil champion, for transporting Venezuelan crude in violation of US sanctions, ramping up its pressure campaign to oust Venezuela’s President Nicolás Maduro from power.
“As the primary broker of global deals for the sale and transport of Venezuela’s crude oil, Rosneft Trading has propped up the dictatorial Maduro, enabling his repression of the Venezuelan people,” said Mike Pompeo, US secretary of state. He added that Mr Maduro had benefited from “malign support” from Russia, Cuba, Iran and China.
A senior US administration official said on Tuesday that the measure “not only goes after the US-based assets but also stands as a prohibition worldwide”. The official said anyone engaging with Rosneft Trading, the Geneva-based subsidiary, risked being sanctioned by the US.
Rosneft Trading did not immediately respond to a request for comment. The US also designated Didier Casimiro, Rosneft Trading’s board chairman and president. A London-based spokesman for Mr Casimiro were not immediately able to comment.
Another senior US official said the measure was the first in a series of actions that was “a demonstration of the president’s commitment to securing a democratic transition in Venezuela”, referring to the Trump administration’s public focus on pushing Mr Maduro out of power.
The US and numerous other countries back Venezuelan opposition leader Juan Guaidó, who declared himself the rightful interim president in January, citing abuses by Mr Maduro in last year’s presidential election. Mr Trump made a public show of support earlier this month by bringing Mr Guaidó as a guest to his annual State of the Union address.
Rosneft declined to comment. Shares in Rosneft, in which BP holds a 19.75 per cent stake, fell as much as 5.2 per cent on the Moscow stock exchange on news of the sanctions.
Jorge Arreaza, Venezuela’s foreign minister, tweeted that the Rosneft sanctions are “arbitrary”, “perverse” and “violate the right to free trade and free enterprise”.
Rosneft’s pivotal position as a supplier of gasoline to Venezuela and a facilitator of oil exports has made it a lifeline for Mr Maduro’s government. Rosneft chief executive Igor Sechin, a longtime ally of Russia’s Vladimir Putin, has been a frequent visitor to Caracas, and the Kremlin-controlled oil company is thought to be making large profits from the relationship. [Actually, it’s just getting its loan back.]
A US official said more than half the oil coming out of Venezuela was now handled by Rosneft Trading, and that the US sanctions were a reaction to Rosneft’s “increasingly central role” in Venezuela.
A US official alleged that oil traders were engaging in deception and ship-to-ship transfers “in a direct effort to change the identity of the oil and hide it from purchasers”.
A third US official said Rosneft Trading had facilitated shipping 2m barrels of oil to west Africa in January, and last summer provided a shipment of 1m barrels of crude oil destined for Asia.
“This action shall have a significant impact on the Maduro regime,” said the third official.
Venezuela produced 733,000 barrels a day in January, according to secondary sources relied on by Opec to assess members’ production, equivalent to less than 1 per cent of world supply.
“We’re confident global markets will remain stable,” said a US official.
Maximilian Hess, head of political risk at AKE Group, said: “Any sanctions activity on any part of the Rosneft group will impact its operations, and cause a lot of headaches for counterparties. Sanctions just affecting Rosneft Trading will impact refiners in Europe dealing with the firm.”
But Mr Hess said he did not think the measures would affect other Rosneft projects abroad, such as its work in Kurdistan or the Zohr gasfields. Rosneft was already under sectoral sanctions that limit debt financing to 60 days, and Mr Hess said the market had grown used to that, which could limit the shock.
Mr Hess added that Venezuela’s debt to Rosneft had fallen sharply in recent months as the Russian company had sought to recoup its money. From $4.8bn in late 2017 it has fallen to $800m at the end of the third quarter, with Rosneft set to announce its full-year results tomorrow.
Source: Financial Times