Energy Did ExxonMobil Conduct Business with Countries Under US Sanction?

Did ExxonMobil Conduct Business with Countries Under US Sanction?

Published By News Desk at January 10, 2017 10:55 am We look at how Exxon Mobil under Rex Tillerson’s leadership was able to conduct business with countries under US sanction and whether this will have a bearing on his appointment as Secretary of State

A US Securities and Exchange Commission (SEC) filing revealed that Irving, Texas-based Exxon Mobil Corporation (NYSE:XOM) conducted business with Sudan, Syria, and Iran through a subsidiary based out of Europe. All these countries were under US sanction because of state-funded terrorism. This was done at a time when the current frontrunner for the position of Secretary of State, Mr. Rex Tillerson was a part of the top management of the biggest publicly listed energy company in the world. Mr. Tillerson joined the company in 1975 was appointed as a Senior Vice President in 2001, Director and President three years later in March 2004 and CEO and Chairman on January 1, 2016.

He is expected to be questioned regarding the details of these deals during his confirmation hearing in front of the Senate Foreign Relations Committee on Wednesday, January 11. These deals were done during 2003 and 2005 by an entity known as Infineum. Exxon Mobil had a 50-50 partnership with Royal Dutch plc (ADR) (NYSE:RDS.A) in this joint venture.

Exxon Mobil has termed all these deals as legal because Infineum was not located in the US and any US national was not a part of the deal. Furthermore, Exxon also termed these deals as insignificant concerning monetary terms. The 2006 filing disclosed that the company generated roughly $55 million in revenues from these three under-sanctioned countries. This is a highly insignificant amount as compared to Exxon Mobil’s top line of more than $365 billion at that time.  

Meanwhile, a letter issued by the SEC inquired the company’s inability to reveal transactions to shareholders with three state financier of terrorism. The letter highlighted that although the deal was insignificant in monetary terms but such corporate development should be disclosed by a significant impact on the “company’s reputation and share value.”

Exxon Mobil also played around the sanctions levied upon by the US on Russia following its incursion into the Ukrainian territory. The deals struck after the sanctions by Exxon Mobil were technically an expansion of projects already under operations. These didn’t violate the sanctions, which aimed the development of oil and gas technology. However, Exxon had to pull out of a major investment in the Arctic region, and as a result, the company did not get access to new reserves. The oil major has struggled in finding new and significant reserves in recent times.