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White House raises eyebrow over Russian oil giant, Rosneft’s deal

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An $11 billion deal with a Russian oil producer, commodity trader Glencore and a Qatari sovereign fund may be under sanctions review, the White House said. Anglo-Swiss trader and mining company Glencore confirmed it was in the final stages of a deal alongside the Qatar Investment Authority to spend $11 billion for a 19.5 percent stake in Russian oil producer Rosneft. The Russian oil producer is a target of U.S. sanctions imposed after the government in Moscow annexed the Crimean Peninsula in Ukraine following upheaval in the former Soviet republic in 2014.

“Experts at the Department of Treasury that are responsible for constructing and enforcing the sanctions regime will carefully look at a transaction like this,” White House spokesman Josh Earnest said. “They’ll look at the terms of the deal and evaluate what impact sanctions would have on it.” Russian media agency Tass confirmed questions about sanctions extended into Europe, but said there are no formal bans prohibiting U.S. or European companies from taking on shares in Rosneft. Russia’s largest oil producer, Rosneft reported third quarter profit of around $400 million was off 77 percent from the previous year. CEO Igor Sechin blamed the sustained low price for oil for the poor performance.

Rosneft reported total daily hydrocarbon production increased 1 percent from the second quarter and 1.3 percent year-on-year to 4.1 million barrels per day, despite some production issues at some of its assets. There were few comments about sanctions in November when British energy company BP said it was forming a joint venture with Rosneft to carry out exploration work in two inland basins in Russia. BP CEO Bob Dudley served formerly as a top official at Russian joint venture TNK-BP before moving to the British major.

The Kremlin has been reviewing privatization options as the Russian economy risks lingering in recession because of the strains brought on by Western sanctions and low crude oil prices. In March, finance officials said privatizing state oil companies could bring in billions of dollars to the federal budget. A Glencore spokesperson told UPI the company was not offering comments about the White House reaction at this time.

– UPI

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