American oil giant Exxon Mobil is seeking the green light from President Trump's administration in order to resume drilling around the Black Sea with a state-owned Russian corporation.
The Obama administration did not act on the application, but Exxon Mobil hoped that the Trump administration would take a favorable view.
But Tillerson and company officials did note that Exxon Mobil had received a waiver to complete drilling an exploration well in Russia's Arctic waters.
The Treasury Department's refusal to grant Exxon-Mobil a waiver is particularly noteworthy because the Exxon CEO who managed to get waivers iin 2015 and 2016, Rex Tillerson, is the current US Secretary of State, and would seemingly be in a position to influence such a move. But during his confirmation hearing before the Senate earlier this year, Tillerson said he would recuse himself from any decisions involving his former company for two years.
Thanks to sanction waivers granted by the European Union, Norway's Statoil ASA is now drilling in the Arctic Barents Sea, while Italy's Eni is operating in both the Barents and the Black Sea. That's now become something of a political impossibility given that multiple Trump campaign aides are in the crosshairs of federal investigations looking for signs of collusion with Russian Federation in the run-up to the November vote.
Exxon's waiver request was met with resistance from key lawmakers this week. Sen.
Sen. John McCain, a Republican, asked "Are they insane?" when news of the waiver application broke.
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Kara Sea is estimated to hold 87 billion barrels of oil, according to Rosneft CEO Igor Sechin. The sanctions were put in place in 2014 by the Obama administration after Russian Federation invaded Ukraine.
"Our 2015 application for a license under the provisions outlined in the US sanctions was made to enable our company to meet its contractual obligations under a joint venture agreement in Russian Federation, where competitor companies are authorized to undertake such work under European sanctions", the company said.
One of the controversies around this appointment was Mr Tillerson's apparent closeness to senior figures in the Moscow government, including Vladimir Putin.
He added: "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".
Any request from Exxon to expand its business in Russian Federation is bound to draw scrutiny from U.S. lawmakers investigating possible ties between some campaign aides of U.S. President Donald Trump and Moscow.
US companies frequently file license applications to the Treasury Department asking permission to undertake activities that would otherwise be barred by sanctions.