As tensions mount with Russia over Moscow’s relationship with Syria and its president, Bashar al-Assad in the wake of last week’s chemical attack on Syrian citizens, Exxon is trying to work with Russia to drill for oil. However, that violates U.S. sanctions placed on the country by President Obama for Russia’s annexation of Ukraine. With former Exxon CEO Rex Tillerson, who has had a particularly friendly relationship with Russia, acting as Secretary of State, can Exxon get the go ahead to partner with Russia and start drilling in the Black Sea?
Will Exxon Be Able to Drill in the Black Sea Soon?
Exxon’s request to partner with Russia and drill in the Black Sea is sure to cause public outcry. Current Secretary of State Rex Tillerson has vowed to recuse himself from any matter involving Exxon for the first two years of his tenure. However, is there enough insulation between Tillerson and the rest of the administration to give the request an unbiased, objective review?
On the one hand, there are many members of Congress who want to see sanctions increased against Russia in light of Moscow’s alleged role in tampering with the presidential election which landed Trump in office. But on the other hand, President Trump is high on oil. Oil means money. And jobs. Those are two things which Trump puts ahead of most anything.
So which wins out?
That remains to be seen. The Treasury Department is the office to grant or deny that waiver. But Tillerson’s State Department has a hand in that decision. . Tillerson has enjoyed a particularly close relationship with Moscow, even being granted the Order of Friendship award by Vladimir Putin in 2013. So, while Tillerson may recuse himself from the process, will his department just ignore his relationship to his former company? Not likely.
Exxon claims that the deal struck in 2012 under Tillerson provides exploration rights which would expire soon if unused. In addition, the company would take on a loss of over $1 billion due to the sanctions. But those sanctions are there to prevent Russia from gaining technology which it otherwise would not possess.
There is an estimated 30 billion barrels of untapped oil in the area. And that reservoir has been off limits to Western countries. Exxon has a chance to tap that well, but it comes at a cost of working directly with Russia. It’s a test for Trump, putting his goals of jobs and revenue at odds with his tough stance against former pal Putin. Yet, in 2015, Exxon did receive a license allowing for “limited administrative actions” with Rosneft. That would expedite operations were Exxon to receive its waiver.
Watch this news report as Trump picked Exxon Mobil CEO Tillerson to lead State Dept from MSNBC:
There’s a 50/50 chance that Exxon gets a green light. If the oil titan does receive its waiver, expect shares of Exxon Mobil Corp. (XCM) to Skyrocket.
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