Russian state-controlled oil producer Rosneft is on the brink of closing its trading arm, two months after the unit was placed under US sanctions for handling Venezuelan crude.
A winding-down of the Geneva-based operation is under way, according to two people with knowledge of the situation, while some employees have been sent home in recent weeks and senior staff have been looking for jobs elsewhere.
The US Treasury imposed sanctions on Rosneft Trading in February for buying and selling Venezuelan oil, a move that in effect banned all other parties from any dealings with the company. Washington said the company’s operations had “propped up” the regime of Venezuelan president Nicolás Maduro.
In response, Rosneft said last month it had agreed to sell all its assets in the South American country and that all trading operations “that have any relation with Venezuela have been ceased in their entirety”.
The company on Thursday told the Financial Times it was reviewing the future of the trading arm’s operations.
“The future of [Rosneft Trading] as a trading business and its mandate is currently being considered, taking into account a potential change in the position of the US regulators given comprehensive actions undertaken by the company to date,” Rosneft said in a statement.
Closure is among options being considered, according to a third person with knowledge of the talks.
Rosneft’s role as both a supplier of gasoline to Venezuela and a trader of its crude exports made it a lifeline for Mr Maduro’s government after other trading companies backed out under US pressure.
Washington views his regime as illegitimate and has called for his ousting, while Moscow has condemned the US position and continued to provide support.
Rosneft chief executive Igor Sechin, a longtime ally of Russia’s Vladimir Putin, has been a frequent visitor to Caracas. The company is understood to have made large profits from the relationship, which also involved multibillion-dollar loans to the country, repaid in oil.
A US official said in February that more than half the oil coming out of Venezuela was being handled by Rosneft Trading.
Rosneft has aimed to build an international trading business to rival international oil majors such as BP and Royal Dutch Shell, and in late 2013 agreed to buy Morgan Stanley’s oil business, one of the largest on Wall Street.
The deal fell apart the following year following US sanctions levied against Moscow, Rosneft and Mr Sechin in response to Russia’s annexation of Crimea, which have since weighed on its ambitions.