The sanctions, coordinated with similar European Union steps, were
triggered by what the West sees as Moscow's recent effort to
destabilize eastern Ukraine by backing pro-Russian separatists with
troops, heavy arms and cross-border shelling.. They are the latest
economic penalties imposed by the West since Russia annexed Crimea
from Ukraine in March.
The sanctions target companies including Sberbank, Russia's largest
bank by assets, and Rostec, a conglomerate that makes everything
from Kalashnikovs to cars, by limiting their ability to access the
U.S. debt markets.
They also bar U.S. companies from selling goods or services to five
Russian energy companies to conduct deepwater, Arctic offshore and
shale projects. The Russian firms affected are Gazprom, Gazprom
Neft, Lukoil, Surgutneftegas and Rosneft.
The United States stressed that the sanctions could be removed if
Russia, which denies sending troops into eastern Ukraine and arming
the separatists, took a series of steps including the withdrawal of
all of its forces from its neighbor.
However, a defiant Russian President Vladimir Putin called the new
economic penalties "strange," given his backing of peace efforts in
eastern Ukraine, and Russia's Foreign Ministry said it would respond
quickly with retaliatory measures against what it criticized as
another "hostile step."
SHUTTING DOWN SOME OIL EXPLORATION
The energy sanctions, and similar EU steps, are not designed to curb
Russia's current, conventional oil production but to hit future
production by depriving Russian firms of the expertise of companies
such as Exxon Mobil Corp and BP Plc.
Russia, along with Saudi Arabia and the United States, is one of the
world's top oil producers and is the main energy supplier to Europe.
Like other producers, it is keen to extract oil from the arctic,
shale fields and deep sea deposits.
The latest U.S. energy sanctions go further than steps Washington
took in July, when the U.S. Commerce Department barred American
companies from using certain technologies to exploit oil in shale,
deep sea and arctic fields.
"It is designed to effectively shut down this type of oil
exploration and production activity by depriving these Russian
companies of the goods, technology and services that they need to do
this work," a senior U.S. official who spoke to reporters on
condition of anonymity said of the U.S. and EU steps.
Texas-based Exxon signed a $3.2 billion agreement in 2011 with
Russian company Rosneft Oil Co to develop the Arctic, while BP owns
18.5 percent of Rosneft, the Russian state-controlled oil giant,
according to Thomson Reuters data.
Earlier this year BP signed a deal to explore for oil with Rosneft
in Russia's Volga-Urals region primarily focusing on unconventional,
or shale formations, in that region.
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Major oil companies, including Exxon, said they were assessing the
sanctions and would comply with U.S. law.
The new U.S. sanctions
were timed to coincide with fresh European Union economic penalties
that included restrictions on financing for some Russian state-owned
companies and asset freezes on leading Russian politicians.
The U.S. Treasury Department said the sanctions include a ban on
U.S. individuals or companies dealing with Rostec, a major Russian
technology and defense conglomerate, in debt transactions of more
than 30 days maturity.
Assets also were blocked for five state-owned defense technology
firms, OAO Dolgoprudny Research Production Enterprise, Mytishchinski
Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey
GSKB, and JSC NIIP.
The new sanctions also tighten the financial noose on six Russian
banks, including Sberbank, by barring U.S. individuals and companies
from dealing in any debt they issue of longer than 30 days maturity.
The five banks previously covered had only faced a restriction on
debt maturities of more than 90 days. Like those five, Sberbank now
also faces a ban on U.S. equity financing.
The Treasury Department also imposed sanctions prohibiting U.S.
individuals and companies from dealing in new debt of greater than
90 days maturity issued by Russian energy companies Gazprom Neft and
"These steps underscore the continued resolve of the international
community against Russia’s aggression," U.S. Treasury Secretary Jack
Lew said in a statement. "Russia’s economic and diplomatic isolation
will continue to grow as long as its actions do not live up to its
(Additonal reporting by Roberta Rampton, Lesley Wroughton, Timothy
Gardner in Washington; Ernest Scheyder in North Dakota, Terry Wade
in Houston and Alessandra Prentice in Moscow; Editing by Tim Ahmann
and Tom Brown)
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