US imposes sanctions on Swiss subsidiary of Russian oil giant Rosneft
The US has imposed sanctions on Rosneft Trading, a Swiss subsidiary of the Russian oil company Rosneft, for trading oil with Venezuela, the US Office of Foreign Assets Control (OFAC) announced on Tuesday.
As of Tuesday, February 18, Rosneft Trading S.A. will be blacklisted by OFAC, and its assets will be frozen. Furthermore, US citizens and legal entities will be banned from concluding any deals with the company itself or any organization of which it owns more than 50%.
Personal sanctions are being imposed on the company’s president, Didier Casimoro. There will be a transitional period until May 20, during which all deals with Rosneft Trading must be closed.
The company has “acted as an intermediary in the sale throughout the world of oil from Venezuela on behalf of the illegitimate regime of [Nicolas] Maduro,” a senior representative of the US administration explained at a press conference.
She added that the sanctions will not cause problems for the global oil market. “We are confident that energy markets will remain stable, and that there is adequate supply on the global oil market,” the White House representative noted.
The Venezuela-related sanctions do not apply to the parent company, Rosneft Oil Company, or to its subsidiaries, provided they are not owned by entities under sanctions, the US Treasury Department noted in its press release.
The department noted that since 2014, Rosneft has been under sanctions in connection with Ukraine. The Russian company’s access to the global capital market has been restricted, and it cannot borrow in the West for periods longer than 14 days.
According to Reuters, Rosneft has been the only buyer of Venezuelan oil since last summer. The company has received oil as payment for $16 billion in loans, and has resold it to refineries in India and China.
In February 2020, threatened by sanctions, the Russian company apparently wrapped up its operations. According to Platts, Venezuela’s PDVSA has been unable to sell a single barrel of oil since the start of the month.
The sanctions have targeted Rosneft’s trading company, but the company can continue to trade oil directly through other traders, observes Raiffeisen Bank analyst Andrey Polishchuk. At the same time, “it’s quite a serious signal” that the US is not afraid to slap sanctions on any major trader, he adds.
“It’s essentially a warning sign,” agrees Sergey Khyestanov, assistant professor at RANEPA. “The US is giving it an opportunity to reformat its business by excluding all of its subsidiary’s operations.”
Russia will do all it an to continue collaborating with Venezuela in the energy sphere, despite the US sanctions, said Pavel Zavalny, Chairperson of Russia’s State Duma Energy Committee, to Interfax.
Zavalny decried the current situation as “unfair competition”. “The Americans are consistent in their policy, and these aren’t the last sanctions in this series,” he observed. Nevertheless, “you can’t abandon a friend in need,” he said.