Senator: Treasury hasn’t given update on Russian deal for U.S. oil

Image result for Senator: Treasury hasn't given update on Russian deal for U.S. oilTreasury Secretary Steven Mnuchin has not responded to a letter from a bipartisan group of senators who on April 10 asked the Treasury to investigate a loan deal that could pave the way for Russia’s state-owned oil firm to take a major stake in a U.S. oil company, according to a spokesperson for Senator Bob Menendez, D-NJ.

“It is very disappointing that the Administration has yet to respond to Senator Menendez’s request,” said Juan Pachon, the senator’s deputy communications director. “We will be following up with them in the coming days as this issue is of great concern to those who don’t want to run the risk of putting (Russian President Vladimir) Putin and his cronies in a position where they can control a key portion of America’s critical energy infrastructure.”

The senators expressed concern over a Nov. 30 deal, which CBS News first reported on in March, that would allow Russia’s Rosneft to claim at least nearly half of U.S. oil company Citgo from PDVSA, the Venezuelan state-owned oil company, if PDVSA defaults on billions in loans.

The deal “could have significant national security implications for critical energy infrastructure in the United States,” according to the letter, which in addition to Menendez was signed by Senators Marco Rubio, R-Fla.; John Cornyn, R-TX; Bill Cassidy, R-La; Ted Cruz, R-TX; and Dick Durbin, D-Ill.

The letter notes that the deal would potentially give Rosneft a 49.9 percent minority stake in Citgo, but other transactions could tip the Russian company into owning a majority of the company. The senators also expressed concerns that Russia could use its control of Citgo to counter sanctions imposed by the Obama administration after Russia annexed the Ukrainian territory of Crimea in March 2014.


“Russia has also expressed strong opposition to existing sanctions. As such, we are extremely concerned that Rosneft’s control of a major U.S. energy supplier could pose a grave threat to American energy security, impact the flow and price of gasoline for American consumers and expose critical U.S. infrastructure to national security threats,” the senators wrote.

The Treasury Department did not return multiple requests for comment.

Mnuchin is the chair of the Committee on Foreign Investment in the United States, a panel of nine Cabinet members who review the national security implications of foreign investments in U.S. companies. In 2014, the most recent year for which data is available, it rejected just one of the 147 deals it reviewed.

The senators requested a response from Mnuchin by April 28, as well as updates on any potential review of the deal.

Just over 50 percent of Rosneft is owned by Rosneftegaz, a Russian state agency run by Igor Sechin, who is widely considered Putin’s right-hand man. A 19.5 percent stake in the company was purchased in December by a consortium of investors that include the Anglo-Swiss commodities producer and trader Glencore, the Qatar Investment Authority and anonymous investors based in the Cayman Islands. The rest is owned by British oil company BP and Russia’s National Settlement Depository, a division of the Moscow stock exchange.

A former British spy’s 35-page dossier about alleged communications between Trump associates and a Russian official includes claims that in July 2016, Sechin met with energy industry investor Carter Page, who at the time was a foreign policy adviser to the Trump presidential campaign. Page and Russian officials have denied the meeting occurred.

While the Treasury Department has not yet weighed in on Rosneft’s Citgo deal, on April 21 it announced a decision on another transaction involving the Russian company.

The department announced that Exxon Mobil (XOM) would not be granted a waiver it sought which would have allowed it to resume drilling around the Black Sea in partnership with Rosneft.

The decision was the latest indication that the White House was backing away from statements by then-presidential candidate Donald Trump during the 2016 campaign that he planned to relax sanctions imposed on Russia after it annexed the Ukrainian territory of Crimea in 2014. The sanctions prevented Exxon from participating in the multi-billion dollar drilling deal.