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Gazprom CEO Targeted as US Tightens Sanctions

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The Trump administration widened the scope of US sanctions against Moscow Friday in new measures targeting several high-profile Russian firms and individuals, including Gazprom CEO Alexei Miller. The US Treasury Department named 24 high-powered Russian officials and businessmen and 14 companies in the new restrictions, blocking US firms and individuals from doing business with them. The moves come amid an increasingly sour relationship between Moscow and the West, and follow tit-for-tat diplomatic expulsions in Russia and Western countries following the poisoning of former Russian military intelligence official Sergei Skripal in the UK (IOD Mar.19'18). “We knew sanctions were coming. I think this is as strong as many had feared or hoped, depending on which side of things you fall,” said Ginger Faulk, a lawyer at Baker Botts. Treasury’s list of newly sanctioned Russians reads like a "Who's Who" of Russia's leading businessmen who have at one time or another had President Vladimir Putin’s ear. “Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities,” Treasury Secretary Steven Mnuchin said. Several lawyers noted that the actions put Gazprom in the same situation as state-run oil company Rosneft, whose boss Igor Sechin was added to the Specially Designated Nationals (SDN) list back in 2014. Miller may be unable to sign legally binding deals with firms or people in the US on behalf of Gazprom. The impact on Gazprom's future ability to tap Western capital markets, which it has done often recently at attractive financial terms, was not immediately clear (IOD Mar.8'18). Washington in the past has avoided applying the harshest sanctions on Gazprom because of Europe's high dependence on Russian gas. Last year, the Treasury Department fined Exxon Mobil for signing deals with Sechin, although the supermajor contested the fines, arguing sanctions only applied to Sechin’s personal dealings (IOD Jul.21'17). Miller responded glibly to the sanctions on Russian television. “Finally, [I’m] added. This means we’re doing everything right,” he said. Miller had been rumored to be leaving Gazprom following Russian presidential elections in March, and the new sanctions again raise questions about his future at the company. Other influential businessmen sanctioned include Vladimir Bogdanov, CEO of Surgutneftegas, Russia’s third largest oil producer; Igor Rotenberg, a controlling shareholder in Gazprom Burenie, a major oil and gas driller; Oleg Deripaska, a metals and hydropower-magnate with ties to Paul Manafort, the former campaign manager of US President Donald Trump; and Viktor Vekselberg, a former owner and manager of the new defunct TNK-BP and reportedly the richest man in Russia at one time. Bogdanov is largely viewed as a well-respected oilman who largely keeps to himself. However, Surgutneftegas is viewed in some circles as one of Putin's assets. The firm maintains a cash cushion of more than $30 billion, atypical for oil companies that would usually reinvest that capital. As recently as last year, Surgutneftegas had been considering an investment into a US Honeywell-made hydrocracking unit for its 400,000 b/d refinery in Russia. By taking stronger action toward Moscow, the Trump administration may stave off the appetite for fresh economic restrictions in Congress, where some lawmakers were calling for new legislation last month to impose sanctions on Gazprom’s Nord Stream 2 pipeline, sanctions lawyers say (IOD Mar.20'18). The new measures allow Treasury Department officials to tell lawmakers, “'Set aside your concerns about the big guy, and focus on what we’ve done,'” said the Atlantic Council’s Brian O’Toole, a Treasury Department official under President Barack Obama. “This is kind of the big haymaker everybody’s been waiting for.” Emily Meredith, Washington; Vitaly Sokolov, Moscow; and Gary Peach, Riga

Topics:
Security Risk , Sanctions
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