Rosneft says sanctions on Russia will hurt US, Western investors(Read article summary)
Russia's government-owned oil company Rosneft says US sanctions imposed on Russia will only hurt the US and other Western investors. Rosneft says that the US sanctions are 'illegitimate and groundless.'
Rosneft, Russia’s government-owned oil giant, says new US sanctions imposed because of Moscow’s suspected role in the continuing fighting in Ukraine are not only “illegitimate,” but they also won’t work as Washington intended.
On July 16, the Obama administration imposed its strictest sanctions yet on Russia, including denying Rosneft access to American debt or equity markets for some new financing. Still, the penalties didn’t include prohibitions on US companies or individuals from continuing to do business with Rosneft or with Novatek and Gazprombank, other Russian companies targeted by the sanctions.
In a statement on July 18, Rosneft shrugged off the new sanctions, saying they won’t keep it from pursuing its current initiatives and paying dividends.
In announcing the sanctions on July 16, US President Barack Obama said the United States and its allies have “repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine; that Russia must urge separatists to release their hostages and support a cease-fire; that Russia needs to pursue internationally mediated talks and agree to meaningful monitors on the border.”
Rosneft scoffed at the new sanctions, saying the US “has no influence on either political or economic processes ongoing in Ukraine. For this reason, the above-mentioned sanctions are illegitimate and groundless.”
Despite Rosneft’s claim of robust financial health, the company’s shared fell by 4.3 percent in Moscow trading on July 17 and a further 1 percent by mid-afternoon on July 18. It was the sharpest decline in the value of Rosneft stock in over a year. (Related Article: Exxon, BP Defy White House; Extend Partnership with Russia)
Still, Rosneft CEO Igor Sechin, in Brasilia, told Bloomberg News that the company is healthy enough not to need “emergency” financial help to keep operating and expanding.
Even so, Rosneft is the most indebted Russian oil company, and Andrey Polischuk, an energy specialist at ZAO Raiffeisenbank in Moscow, told Bloomberg it will need to rely increasingly on financial assistance from China, including $63 billion in advance payments for oil deliveries over the next four years.
The Rosneft statement also said the new US sanctions had missed their mark, doing more damage to Western interests than to Rosneft itself. “Rosneft is a public company traded on Russian and international exchanges,” it said. “Therefore the sanctions inflict damage upon the company shareholders, including US citizens and residents.”
In fact, the British oil giant BP, which owns fully 19.75 percent of Rosneft, could face financial losses due to the sanctions. Meanwhile, the Russian company is in the midst of a deal to buy Morgan Stanley’s oil-trading subsidiary, though Morgan Stanley said it didn’t appear that the sanctions would affect the transaction.
Rosneft also is involved in several joint initiatives with leading international energy companies, including ExxonMobil and Statoil, to extract oil from Russian wells and offshore reserves in the Arctic.