Caracas, February 19, 2020 (venezuelanalysis.com) - The US Treasury Department imposed sanctions against Russian state energy giant Rosneft on Tuesday for “operating in the oil sector of the Venezuelan economy.”
The measure targeted Rosneft Trading SA, the Swiss-based subsidiary of the Russian multinational, and its chairman Didier Casimiro.
“Rosneft Trading S.A. and its president brokered the sale and transport of Venezuelan crude oil,” Treasury Secretary Steven T. Mnuchin said in a statement.
The statement listed several alleged Rosneft dealings with Venezuelan state oil company PDVSA, including 55 million barrels transported between September and December 2019.
As a result, all US assets in which Rosneft Trading and Casimiro hold a larger than 50 percent stake are blocked. The Treasury’s Office of Foreign Assets Control (OFAC) granted a 90-day period for companies to wind down their dealings with Rosneft Trading.
White House Special Envoy for Venezuela Elliott Abrams later gave a press conference, referring to the latest measures as a “significant step.”
“I think you will see companies all over the world in the oil sector now move away from dealing with Rosneft Trading,” Abrams told reporters.
Washington has imposed several rounds of punishing sanctions targeting Venezuela’s oil sector, traditionally the source of over 90 percent of the country’s foreign currency income. Financial sanctions against PDVSA were first introduced in August 2017, before an oil embargo was imposed in January 2019. Venezuela’s oil output plummeted from an average of 1.911 million barrels per day in 2017 to 793,000 in 2019.
Following measures against other sectors of the Venezuelan economy, the Trump administration imposed a blanket ban on all dealings with Venezuelan state entities in August 2019, while also authorizing secondary sanctions against third party actors. US officials had repeatedly threatened to levy secondary sanctions against foreign companies buying Venezuelan crude.
With the US embargo driving away buyers in recent months, Rosneft had reportedly been carrying over 60 percent of Venezuela’s crude output before rerouting to other destinations. The company had denied violating US sanctions.
Other multinationals, including Spain’s Repsol and India’s Reliance Industries, have also been warned to “tread cautiously” by the Trump administration. Both companies have stated that they have not violated US sanctions, allegedly by exchanging crude for fuel or diluents.
Rosneft has yet to comment on Washington’s decision, with the company’s shares falling by as much as 5.2 percent in Moscow’s stock exchange. The Russian Foreign Ministry published a statement criticizing the US for “raising international tensions,” while vowing that relations with Venezuela would not be affected.
Venezuelan authorities likewise blasted the latest move, with Foreign Minister Jorge Arreaza stating that Caracas “firmly rejects” the measures against Rosneft Trading.
“The measures against Rosneft Trading are aimed against our oil industry [...]. They keep attacking the people of Venezuela, trying to generate suffering and difficulties,” Arreaza wrote on Twitter.
The foreign minister added that the Venezuelan government would add the latest measures to a criminal complaint submitted before the International Criminal Court (ICC). Arreaza delivered a 60-page document to the ICC at The Hague last week, arguing that US sanctions represent “crimes against humanity” and can be equated to “weapons of mass destruction.”