Gazprom's Plans May Anticipate End of Sanctions

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By Paul Benecki 2017-01-02 20:33:13

In a little-noticed post on December 30, a Russian government outlet announced that American service companies are scheduled to work on the Arctic offshore platform Prirazlomnaja this summer – an activity which could potentially violate U.S. sanctions. 

The maintenance period itself is unremarkable: parts of the platform’s topsides date to 1984, and the offshore environment above the Arctic Circle is extraordinarily hard on equipment. However, it is not clear that an American firm could perform the work without a waiver from the U.S. Department of the Treasury. The platform is owned by Gazprom Neft, and to penalize Russia for the annexation of Crimea, the Treasury prohibits American firms from providing Gazprom (and others) with goods, services or technology for "exploration or production for [Arctic offshore] projects that have the potential to produce oil." 

If these sanctions are still in place this summer, the unnamed American service companies could be liable for civil penalties. Recent enforcement actions have led to multimillion-dollar fines for the most egregious cases.

There is a possibility, however, that the ban might be lifted by the incoming Trump administration. President-elect Trump's team says that he remains undecided on whether to lift the Ukraine sanctions program, and his appointee for Secretary of State, ExxonMobil CEO Rex Tillerson, has a close relationship with the Russian government through projects that the Treasury forced his firm to cancel: he received the Russian Order of Friendship in 2013 for collaboration with Rosneft on a major Arctic drilling program. Tillerson is a critic of sanctions in general, and his firm still has billions at stake in Russian joint ventures; last year, the head of ExxonMobil's Russian operations said that the company stands ready to return once the ban is lifted.

Senator Chris Murphy (D-Conn.), a member of the Foreign Relations Committee, recently told Politico that he considers Tillerson's nomination "as a clear sign of intent that Trump is going to remove sanctions.” Procedurally, this would only require an executive order from the president – and American service companies could proceed to Prirazlomnaja as scheduled. 

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