Exxon Posts Lower Net Revenue On Refining CostsThe United States and many other countries have been imposing economic sanctions on Russia since the superpower annexed the Crimea in 2014. These sanctions prohibit companies which do business in the United States or other participating countries from doing business in Russia. The energy giant Exxon Mobil Corp. sought a waiver from this prohibition which would allow it to resume its part in a joint oil drilling venture seeking to tap into billions of barrels of Russian crude oil.

Last Friday this waiver was rejected by the U.S. Treasury department. `The decision was made by Treasury Secretary Steven Mnuchin after a consultation with U.S. President Donald Trump. According to an unnamed source with insider knowledge who was not authorized to speak publicly Exxon first requested the waiver in 2015 and has continued to press the government for approval several times a year since then.

Many high ranking members of the U.S. government have been openly critical of Exxon’s waiver request. Among the most vocal of the critics have been Senators John McCain and Bob Menendez. Senator McCain who is a Republican tweeted Democratic Senator Menendez speculating whether Exxon was “crazy” to ask for the waiver.

Exxon did not retreat from their position with Exxon spokesperson Alan Jeffers emailing a statement today saying “We understand the statement today made by Secretary Mnuchin in consultation with President Trump,” The statement further added that the 2015 request “was made to enable our company to meet its contractual obligations under a joint venture agreement in Russia, where competitor companies are authorized to undertake such work under European sanctions.”

Exxon officials have been quite vocal with their objections to a loophole in the European Union version of sanctions which allows existing projects to continue. This loophole has allowed the Italian oil company Eni SpA to continue exploring the Russian section of the Black Sea in search of oil while Exxon was forced to suspend its own plans to drill.

According to filings with the Securities and Exchange Commission, the previous administration had shown signs it might relent and allow Exxon to work despite the sanctions. Three waivers were approved for Exxon to conduct paperwork for its proposed work, two in 2015 and one in October of 2016. The paperwork shows that the first of these waivers was approved just months after the U.S. and the European Union imposed sanctions which closed Exxon’s joint venture with a Russian company on the Kara Sea.

There are vast reserves of crude oil locked in the Russian Arctic between the Siberian Shale and the Black Sea. In 2011 Rex Tillerson who was at the time the CEO of Exxon signed a plan which was approved by the President of Russia Vladimir Putin detailing cooperation between Exxon and a Russian company to explore and develop the site. At the time, according to President Putin, the venture was estimated to ultimately require investment of up to $500 billion over several decades. The venture came to an abrupt halt in 2014 with imposition of sanctions by Western powers.

Mr. Tillerson who is now the U.S. Secretary of State under President Trump has stated he will recuse himself from any issues relating to Exxon for a period of two years.