By Bradley Olson and Peter Nicholas
Exxon Mobil Corp. and other energy companies have joined
President Donald Trump in expressing concerns over a bill to
toughen sanctions on Russia, arguing that it could shut down oil
and gas projects around the world that involve Russian
partners.
The pushback from energy companies such as Exxon and Chevron
Corp. -- and other industries -- threatens to complicate House
passage of the legislation, aimed partly at punishing Russia for
what U.S. officials describe as interference in last year's U.S.
election. The bill breezed through the Senate last month on a
bipartisan, 98-2 vote.
Exxon's advocacy also presents a potential political problem for
the Trump administration, which has been trying to avoid
conflict-of-interest questions involving Secretary of State Rex
Tillerson, the oil giant's former chief executive.
Mr. Tillerson, who has promised to recuse himself from matters
involving Exxon, hasn't explicitly spoken out against the sanctions
bill, but last month urged Congress not to take any actions that
tie the administration's hands.
Mr. Trump is set to meet Russian President Vladimir Putin
face-to-face this week for the first time since the election at the
G-20 summit of world leaders in Hamburg, Germany. The White House
hasn't ruled out a presidential veto of the sanctions measure,
which includes a provision that would make it more difficult for
the president to relax existing sanctions against the Kremlin,
saying that it could erode Mr. Trump's ability to conduct
diplomacy.
A U.S. special prosecutor and Congress are investigating
Russia's use of cyberattacks in the election and whether there were
improper ties between aides to Mr. Trump and Russia's government.
The president has denied any wrongdoing.
As the nation's top diplomat, Mr. Tillerson has said Russia must
be held accountable. A spokeswoman for Mr. Tillerson didn't
immediately respond to a request for comment on Monday.
Lobbyists for Exxon and other oil industry players have
expressed dismay to lawmakers about several provisions in the
legislation, including measures to prohibit partnerships with
Russian individuals or companies under sanctions around the world,
and to add congressional review of certain sanctions exemptions.
Companies also have expressed concern that the bill could force
them to disclose information they consider proprietary.
Exxon spokesman Alan Jeffers said the company doesn't have a
position on sanctions but has provided legislators with information
about how the bill could "disadvantage U.S. companies compared to
our non-U.S. counterparts." A Chevron spokesman declined to
comment.
The lobbying by Exxon and other big oil companies is part of a
push to preserve potential business relationships with Russia, even
as U.S. ties with the Kremlin sink to new lows.
The bill has the potential to scuttle any U.S. business
partnership around the world that involves Russian partners. That
has prompted concerns not only from energy firms but also banking
and industrial companies, according to people familiar with the
matter. General Electric Co. is closely watching the legislation
over concerns it could disadvantage U.S. companies relative to
global peers, one person said.
"This has far-reaching impacts to a variety of companies and
industries, " said Jack Gerard, chief executive of the American
Petroleum Institute. "It has the potential to penalize U.S.
interests and advantage Russia."
The bill faces an uncertain fate in the House, after objections
raised by some House Republicans, including Rep. Pete Sessions of
Texas. A standoff was avoidable, some analysts say.
Leon Panetta, who served as White House chief of staff under
former President Bill Clinton and as a cabinet member in the Obama
administration, said that Congress and the Trump administration
should try to forge a consensus on what sanctions should be
applied.
"When it comes to sanctions policy the best course for this
country is to have both the Congress and the president in the same
place," Mr. Panetta said. "If it looks like there's a dispute
between the president and Congress it sends a terrible message to
our adversaries and our allies."
For Exxon, the stakes are especially high: The legislation could
further dismantle its fragile partnership with Russian oil giant
PAO Rosneft, which has been mostly on hold since the U.S. imposed
sanctions on the country in 2014 after Russia's annexation of
Crimea. The oil company previously sought a waiver from sanctions,
a request the Trump administration rejected in April.
Exxon has moved ahead with an expansion of a project with
Rosneft that preceded the current sanctions near Russia's Sakhalin
Island in the country's Far East. It has produced more than 650
million barrels of oil since 2005 and is one of the largest foreign
investments in Russia.
As written, the bill could affect two existing Exxon projects
outside of Russia in which Rosneft holds a stake, according to
people familiar with the matter. One is a development involving the
use of hydraulic fracturing in the Permian basin in New Mexico, and
the other is a prospect in Canada's Alberta province.
The prohibition on Russia partnerships would strike at the heart
of efforts by Rosneft to expand outside of Russia. British oil
giant BP PLC owns 20% of Rosneft, and the Russian company signed a
deal in March with Italian energy company Eni SpA to cooperate
globally. Rosneft owns a stake in a massive Eni gas field off
Egypt's shores.
Some U.S. House members have echoed Exxon and industry concerns
that the legislation could lead to the release of proprietary
information. Mr. Sessions, who represents the Dallas area, said he
wants to change provisions that could put U.S. firms at a
competitive disadvantage.
Mr. Sessions said he is "representing companies in the energy
industry that don't want to be blocked from these deals."
Write to Bradley Olson at Bradley.Olson@wsj.com and Peter
Nicholas at peter.nicholas@wsj.com
(END) Dow Jones Newswires
July 03, 2017 19:07 ET (23:07 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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