EU court upholds sanctions against Russia’s Rosneft

By bne IntelliNews March 29, 2017

The European General Court (EGC) in Luxembourg after a year of hearings deemed the sanctions against Russian state-controlled oil company Rosneft as legal, which the company protested as “illegal, unfounded, and politicised”.

Rosnefts insists “it did not commit any unlawful acts in any of the jurisdictions it operates, including Ukraine, and has no links to the crisis in the country”, the company said in a statement, arguing that the sanctions create preferential conditions for other market players.

Rosneft, which accounts for 40% of Russia’s crude output, tried to challenge the sanctions imposed on it by the EU September 2014 limiting Rosneft’s debt and equity financing options with EU banks and restricting the supply of types of extraction technologies and expertise.

Rosneft also filed a lawsuit in the High Court of London, which has requested a position of the EGC on the case.

Other Russian state-controlled majors Sberbank, Gazprom Neft, Vneshtorgbank (VTB) have also filed similar cases to the European court and the ruling on Rosneft may serve as a precedent.

The sanctions have also upset Rosneft’s long-term development plans, as foreign oil majors had to pull out from joint ventures with the company. In 2015, ExxonMobil exited joint exploration drilling operations in the Kara Sea in the Arctic, Russia's main untapped oil reserves, and a major Liquefied Natural Gas project on Sakhalin island in the Far East.

“Rosneft will continue to protect the interests of its shareholders from the unlawful influence of the sanctions by using all available legal means,” the company pledged on March 28.

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