Essar-Rosneft deal not violative of sanctions: U.S.

10/20/2016

WASHINGTON, Oct. 20: The United States does not see violation of any U.S.-EU sanctions in the recent deal between India’s Essar Oil and the Russian oil giant Rosneft, in which the Russian government has a majority stake.

“I don’t think we see any violation of any U.S.-EU sanctions stemming from this deal,” State Department spokesperson Mark Toner said on Wednesday. “We’ve seen the reports in general about this oil deal. I’d refer you to the governments of India and Russia,” he said, without elaborating.

There is a wide array of U.S.- EU sanctions against Russia in force following the annexation of Crimea and in response to Moscow’s role in fomenting trouble in Ukraine. These sanctions have specifically targeted Russian oil and defence companies and Rosneft is one of the five energy companies under U.S. and EU sanctions.

However, most of these sanctions are primary sanctions, which are applicable to companies and entities in the U.S. and EU.

Secondary sanctions bar entities in third party countries too from doing business with the sanctioned entities. Sanctions on Rosneft are only primary in all probability, and hence, the State Department’s view that the Essar deal does not violate them. This point could not, however, be immediately ascertained.

The U.S. sanctions “prohibit the exportation of goods, services (not including financial services), or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil, to five Russian energy companies” including Rosneft, involved in these types of projects, according to a Treasury Department document.

 

A Rosneft-led consortium agreed to acquire Essar Oil in a $12.9 billion transaction announced last week.(TH)

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