US sanctions Rosneft president

April 29, 2014

The US Department of the Treasury issued sanctions against seven Russian government officials and 17 entities on 28 April. Among those officials listed was OAO Rosneft President and Chairman of the Management Board Igor Sechin.

These sanctions were pursuant to the Ukraine-related Executive Order 13661, which “authorizes sanctions on, among others, officials of the Russian Government and any individual or entity that is owned or controlled by, that has acted for or on behalf of, or that has provided material or other support to, a senior Russian government official.” Sanctions against individuals were designated because those listed were seen as being part of the Russian government’s “inner circle.”

“In the April 17 Geneva Joint Statement, Russia agreed to take concrete steps to deescalate the situation in Ukraine, but has thus far utterly refused to do so,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen.  “From the very outset of Russia’s illegitimate and unlawful actions in Ukraine, we have been clear: The United States, acting on its own and alongside our international partners, will impose increasing costs on Russia if it persists in its efforts to destabilize Ukraine and will hold Russia accountable for its provocative actions.”

Rosneft is Russia’s largest petroleum company and the world’s largest publicly-traded petroleum company. Sechin, who was named Rosneft president and chairman of its Management Board in May 2012, is the former Deputy Prime Minister of the Russian Federation and the former Deputy Chief of Staff for President of the Russian Federation Vladimir Putin.

Among other repercussions, US persons cannot have business dealings with those on the Office of Foreign Assets Control's (OFAC) Specially Designated Nationals (SDN) list, and their US assets are frozen. Additionally, they are prohibited entry into the US.

“Sechin has shown utter loyalty to Vladimir Putin - a key component to his current standing,” the US Department of the Treasury said.

The US Department of the Treasury also authorized sanctions against Rosneft Deputy Chairman of the Board of Directors Sergei Chemezov, oil transporter Transoil and gas pipeline construction company Stroygazmontazh (SGM Group).

BP holds 19.75% equity in Rosneft, and BP Group Chief Executive Robert Dudley sits on Rosneft’s board as a non-executive director. He is not a shareholding member. According to a spokesperson for the US Department of the Treasury, as a US citizen, he is not prohibited from dealing with Rosneft or from sitting on the board.

"We are committed to our investment in Rosneft, and we intend to remain a successful, long-term investor in Russia. We will of course comply with all relevant sanctions and continue to monitor the situation closely, but as Rosneft itself is not sanctioned, we will continue to work in an appropriate manner with Rosneft, primarily as shareholder, but also as partner. BP is not alone in being an energy investor in Russia and a partner of Rosneft," a spokesperson from BP said.

Since the sanctions were announced, Rosneft's shares tumbled 1.7%, and S&P sliced its credit rating to BBB-minus from BBB. The spokesperson from the US Department of the Treasury said that the department generally found that, globally, financial institutions refused business dealings with persons on OFAC's SDN list even if not obligated to do so.

Pictured: Sechin, right, with Putin and ExxonMobil President Stephen Greenlee, left, while signing a cooperation agreement in February 2013.



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