Wednesday 19th February 2020
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The U.S. sanctioned a unit of Russia’s largest oil producer, Rosneft PJSC, for maintaining ties with Venezuela’s Nicolas Maduro and state-run oil company PDVSA.
The Treasury Department’s Office of Foreign Assets Control is acting against Rosneft Trading SA, the company’s Swiss-incorporated brokerage firm, as well as its Chairman Didier Casimiro. The U.S. restrictions come with a three-month wind-down period that expires May 20.
The move represents the latest escalation in the Trump administration’s campaign to oust Maduro and rally international support behind Venezuelan opposition leader Juan Guaido. For the oil market, it means disruption and increased legal costs for companies, though the wind-down period gives operators time to adjust to the new regime.
Oil futures erased a decline, with Brent crude settling 8 cents higher at $57.75 a barrel, after falling as much as $1.37. The ruble and Russian bonds fell. Rosneft share tumbled in Moscow, closing 2.7% lower.
The Russian government said the sanctions won't affect its international relations with Venezuela or any other country. Rosneft said the sanctions are illegal, that its operations in Venezuela are commercial, not political, and that other international companies, including American ones, operate there.
“By operating in Venezuela, Rosneft is not violating any international or national law,” the company said, adding the U.S. government presented no proof of illegality. The operations are part of contracts signed before the introduction of sanctions and “are aimed at returning previously made investments and the implementation of long-term commercial interests,” it said.
Rosneft is handling over half the oil coming from Venezuela and helping the country evade sanctions, according to U.S. officials who briefed reporters on condition of anonymity. Rosneft recently facilitated a shipment of 2 million barrels of Venezuelan oil to West Africa, one of the officials said.
Rosneft has been evading sanctions by using ship-to-ship transfers to obtain Venezuelan oil, a U.S. official said. In other cases, they’ve changed names on ships to avoid detection, or lied about the source of the oil.
Today we sanctioned Russian-owned oil firm Rosneft Trading S.A., cutting off Maduro’s main lifeline to evade our sanctions on the Venezuelan oil sector. Those who prop up the corrupt regime and enable its repression of the Venezuelan people will be held accountable.
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