President Barack Obama brought new sanctions against the Russian Federation Wednesday after reports of the country’s heightened military support for Ukrainian separatists and continued military buildup along the Russian-Ukrainian border. The executive order bars individuals or corporations within the United States from financing the debt or equity in Rosneft, Novatek, Gazprombank, and The Bank for Development and Foreign Economic Affairs for three months, according to a Treasury Department report.
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Rosneft claims responsibility for 40% of oil production and 20% refining in Russia. The company has major plays in upstream and downstream markets and possesses 54 fuel stations in Russia, 18 refineries located across the world, and drilling operations in every part of Russia and in 10 countries across the world, including in the United States. In addition, its close partnership with ExxonMobil (NYSE:XOM) implies sanctions could endanger joint projects, including development of oil fields around the globe and the Arctic Research Center, which will aim to enhance scientific understanding of the remote location.
According to the company website, the company’s extraction potential has risen 70% since 2012. The company owns seven refineries and boasted $2.5 billion in profits in the first quarter.
Novatek is Russia’s largest independent natural gas producer, owning six oil fields in Russia and boasting of 12 billion barrels of reserves. A statement released by the company claimed the company was not“conducting any business activities in Ukraine,” would not be affected by the measures, and would continue with its projects on schedule.
Gazprombank is the third-largest bank in the Russian Federation and provides corporate, retail, commercial, investing, and depository services. Both entities are affected by the sanctions. The company reported growth in assets of 7.4% in the first quarter to about $112 billion. It also retains over 3 million private and corporate clients. In addition, the company released a statement stating that US sanctions will not affect its operations.
4. Bank for Development and Foreign Economic Affairs
Bank for Development and Foreign Economic Affairs is a government-owned institution that served as a financial umbrella for the 2014 Sochi Winter Olympics, Russian housing projects, pipeline infrastructure, manufacturing plants, and chemical production facilities. The bank also has a role in Russian shipbuilding, electronics, aircraft construction, and the nuclear power industry, according to the company’s website. The firm retained about $97.2 billion in assets in the first quarter.