XOM Exxon Mobil Corp

By Jay Solomon and Bradley Olson 

WASHINGTON -- President Donald Trump has rejected a bid by U.S. oil giant Exxon Mobil Corp. to resume a Black Sea oil venture with a sanctioned Russian firm close to the Kremlin, Treasury Secretary Steven Mnuchin said Friday.

The Wall Street Journal reported on Wednesday that Exxon last month sought a waiver on Russian sanctions for its oil exploration venture with PAO Rosneft, the Russian energy conglomerate closely aligned with President Vladimir Putin. The company had originally submitted the application in 2015, and revived it in March.

The venture was frozen in 2014 after the Obama administration placed sanctions on Rosneft and its chief executive officer, Igor Sechin, in retaliation for Russia's annexation of the Crimea region of Ukraine.

"In consultation with President Donald J. Trump, the Treasury Department will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions," Mr. Mnuchin said in a statement.

The Trump administration's decision likely will make it impossible for Exxon to drill in Russia's Black Sea waters before its agreement with Rosneft expires at the end of this year. Exxon has until 2023 to explore some of Russia's arctic waters if sanctions are lifted, the company has said.

"We understand the statement today by Secretary Mnuchin in consultation with President Trump," said Alan Jeffers, an Exxon Mobil spokesman. "Our 2015 application for a license under the provisions outlined in the U.S. sanctions 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."

News of Exxon's Treasury application drew sharp criticism in Congress over the past two days. Leading Democrats and Republicans have said the Trump White House should be increasing sanctions on Russia for its alleged effort to interfere in last year's U.S. presidential election, rather than loosening them.

They have also raised concerns the Trump administration could face a conflict of interest in ruling on the Exxon application, given Secretary of State Rex Tillerson's previous position as the company's chief executive officer. State Department officials have said this week that Mr. Tillerson has recused himself from any issues related to Exxon for two years.

"Given Russia's well-documented and troubling activities around the world, it is troubling Exxon Mobil would continue to press for its narrow economic advantage at the expense of our national interests," Sen. Ben Cardin of Maryland, the ranking Democrat on the Senate Foreign Relations Committee, said on Friday. "The deals they are seeking would put money in the pockets of Russian oligarchs and the Russian treasury, guaranteed to be used against America, our interests, and our allies."

Republican Sen. Marco Rubio of Florida told the Journal on Thursday: "While a waiver to allow business with prohibited Russian entities may be in Exxon Mobil's interest, it would clearly not be in America's national security interest."

--Felicia Schwartz contributed to this article.

Write to Jay Solomon at jay.solomon@wsj.com and Bradley Olson at Bradley.Olson@wsj.com

(END) Dow Jones Newswires

April 21, 2017 18:02 ET (22:02 GMT)

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