Earlier this month, reports suggested the US may sanction Rosneft over support for the Maduro regime in Venezuela.
The story conjured memories of 2018, when Treasury’s decision to blacklist Rusal and En+ set in motion the Oleg Deripaska drama that upended the global metals market.
Shares of Russia’s largest oil producer came under severe pressure on February 7th and again on the 10th. Although the stock would trim losses, investors had flashbacks of April 2018, when Russian equities plunged in response to sanctions against dozens of oligarchs and companies.
Fast forward a little more than a week and Treasury pulled the trigger, sanctioning Rosneft’s Swiss-incorporated brokerage firm and the company’s executive Didier Casimiro.
“Rosneft Trading S.A. and its president brokered the sale and transport of Venezuelan crude oil”, Steve Mnuchin said, in a statement. “The United States is determined to prevent the looting of Venezuela’s oil assets by the corrupt Maduro regime”, he added.
The shares immediately tanked.
Russia is engaged in fraught discussions with OPEC around a possible emergency cut to shore up crude prices in the face of demand worries tied to the virus outbreak. The Trump administration was reportedly concerned that tightening the screws on Rosneft would chance driving up oil, but with prices down sharply this year, that seems like a remote risk.
On a call with reporters, a senior administration official said the sanctions will hit the Rosneft unit and Casimiro’s US assets, but also represent a worldwide prohibition. Anyone trading with the sanctioned Rosneft unit runs the risk of incurring the wrath of the US Treasury, the official warned.
Rosneft stands accused of propping up Venezuela’s oil sector and thereby the regime. The company’s “network of deception” involves switching crude to new ships prior to sales, apparently. Some ships change their names and habitually lie about the source of the oil, Treasury said.
The US is confident that energy markets will take this in stride and “remain stable”.
On February 7, Sergei Lavrov delivered remarks outside of the presidential palace in Caracas, where he held “very productive” talks with Maduro. Russia, Lavrov declared, “reiterates its solidarity and respect for the Venezuelan people and government in their struggle against the illegitimate pressure from the United States”. The Kremlin still considers the Trump administration’s pressure campaign tantamount to “blackmail”.
Venezuelan opposition leader Juan Guaido was a guest of Trump’s at the State of the Union. The US president personally approved the sanctions announced on Tuesday, an official said.
Last week, Lavrov chatted with Mike Pompeo on the sidelines of the Munich Security Conference. One imagines this came up.
Full statement
Washington — The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated Rosneft Trading S.A., the Swiss-incorporated, Russian-controlled oil brokerage firm pursuant to Executive Order (E.O.) 13850, as amended, for operating in the oil sector of the Venezuelan economy. OFAC also designated the chairman of the board of directors and president of Rosneft Trading S.A., Didier Casimiro, for purporting to act for or on behalf of, directly or indirectly, Rosneft Trading S.A.
“Rosneft Trading S.A. and its president brokered the sale and transport of Venezuelan crude oil,” said Secretary Steven T. Mnuchin. “The United States is determined to prevent the looting of Venezuela’s oil assets by the corrupt Maduro regime.”
Rosneft Trading S.A. is a subsidiary of the Russian state-controlled global energy giant Rosneft Oil Company. Registered in the Canton of Geneva, Switzerland as a trading company in January 2011, Rosneft Trading S.A. was created to assist Rosneft Oil Company in carrying out its foreign projects. The core activities of Rosneft Trading S.A. are marketing and distribution, including the trading, processing, and transport of raw materials, in particular unrefined petroleum and petroleum products. Separate from today’s action, OFAC previously identified Rosneft Oil Company as operating in the energy sector of the Russian Federation pursuant to Ukraine-/Russia-related Executive Order 13662, and both Rosneft Oil Company and Rosneft Trading S.A. were already subject to certain restrictions under Ukraine-/Russia-related Directives 2 and 4.
Didier Casimiro is the chairman of the board of directors and president with sole signing authority of Rosneft Trading S.A. Casimiro has held meetings with Petroleos de Venezuela (PdVSA) officials that have involved assessing projects and opportunities to strengthen strategic relationships for Rosneft Trading S.A. with PdVSA.
RECENT ROSNEFT TRADING S.A. ACTIVITY:
- In January 2020, Rosneft Trading S.A. facilitated, on behalf of PdVSA, a shipment of two million barrels of Merey-16 crude oil from Venezuela to West Africa.
- In the fall of 2019, PdVSA planned oil shipments with Rosneft Trading S.A. involving 55 million barrels of crude oil liftings from September to December 2019.
- In September 2019, PdVSA supplied a shipment of one million barrels of Merey-16 to Rosneft Trading S.A., which was loaded on a vessel in Venezuela and destined for Asia.
- In August 2019, Rosneft Trading S.A. negotiated a shipment of two million barrels of Venezuelan crude oil with PdVSA and was able to find a vessel willing to transport the cargo despite difficulties that came with doing business in Venezuela.
As with previous OFAC designations, U.S. sanctions need not be permanent and are intended to change behavior. The United States has made it clear that we will consider lifting sanctions for those who take concrete, meaningful, and verifiable actions to support democratic order in Venezuela.
Concurrent with this action, OFAC is issuing a general license that authorizes certain transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving Rosneft Trading S.A.
As a result of today’s action, all property and interests in property of Rosneft Trading S.A. and Didier Casimiro that are in the United States or in the possession or control of U.S. persons, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated individual and entity, are blocked and must be reported to OFAC.
OFAC information
Venezuela-related Designations; Issuance of Venezuela-related General License; ​Issuance of Venezuela-related Frequently Asked Questions; Update to the Sectoral Sanctions Identifications List
we’ve been here before?
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