Elliott Abrams

State Department Briefing on Rosneft and Venezuela

18 February 2020, State Department, Press Briefing Room, Washington, D.C.

Audio AR-XE mp3 of Address


Good morning. Before turning to Rosneft, I wanted to mention a couple of other things. First, I want to begin by reminding you that the "Citgo 6" who were taken from house arrest 13 days ago by the regimeís intelligence service, SEBIN, and sent back to its prison, remain there. Theyíre not being permitted to speak to their families or their lawyers. This cruel and indefensible imprisonment must end, and we condemn their unjust treatment. They should be permitted to leave Venezuela and return to their families. I repeat as well our condemnation of the holding of well over 350 political prisoners by the Maduro regime, including deputies Juan Requesens, Gilber Caro, and Ismael Leon, and Juan Guaidoís chief of staff Roberto Marrero.

Second, weíre pleased that Interim President and National Assembly President Juan Guaido returned home safely a week ago despite regime efforts to attack him and those who greeted him at the airport. Regime thugs dressed as airline employees attacked Guaido and those around him, but happily he escaped without injury. The French, Portuguese, EU, and other ambassadors were there to meet and to greet Guaido and keep him safe. And we congratulate them for that action. Security forces at the airport, supposedly there to maintain order, did nothing.

Guaidoís uncle, who traveled with him, was seized at the airport by the regimeís police. He is being charged with terrorism for allegedly carrying explosives on the plane that carried Guaido and his party from Lisbon, a charge denied by the airline, TAP, and by the foreign minister of Portugal. Like the jailing of Juan Guaidoís chief of staff, Roberto Marrero, this is an obvious and vicious effort to attack Guaidoís closest advisors and his family.

Now, Rosneft. Today the United States sanctioned Rosneft Trading S.A. and its chairman, Didier Casimiro. As Treasury Secretary Mnuchin said, quote, "Rosneft Trading S.A. brokered global oil deals involving the sale and transport of Venezuelan crude to provide a lifeline to the illegitimate Maduro regime," close quote. Rosneft Trading is a subsidiary of the Russian global energy giant Rosneft Oil Company. Rosneft Trading was created in 2011 to assist Rosneft Oil Company in carrying out its foreign projects. Rosneft Oil Company was previously sanctioned in 2014 under Executive Order 13662.

All property and interest in property of Rosneft Trading S.A. and Didier Casimiro that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. OFACís regulations generally prohibit all transactions by U.S. persons or persons within or transiting the United States that involve any property or interests in property of blocked persons after the wind down period.

As you will recall, almost two weeks ago the United States sanctioned Conviasa, the Venezuelan state-owned airline. Todayís sanctions are another step in the policy of pressuring the Maduro regime to allow Venezuela to escape from its terrible crisis through free and fair presidential elections. There will be more steps and further pressure in the coming weeks and months. The United States remains firmly committed to the people of Venezuela and to the cause of freedom there. And as we saw when President Guaido received an ovation during the State of the Union message, this cause has bipartisan support in the United States.

We look forward to the day when Venezuela is free and all our sanctions can be lifted. Until that day comes, the pressure will continue and it will build steadily.

Thank you.


Mr. Brown: Matt.

Question: Hi. Thanks, Ambassador, for doing this. Two things. One, if Rosneft the parent company was already sanctioned, wasnít Rosneft Trading also included under that umbrella? Iím not quite sure I understand.

Mr. Abrams: No. The 2014 sanctions were specific. They dealt with certain technical activities -- drilling in the Arctic, for example -- and a prohibition on accessing western debt financing. It was originally 90 days and limited now to 60 days a few years ago. So that only applies to the -- those technical actions and the debt financing of the parent company, and that didnít affect any other activities of Rosneft or any --

Question: Right. So -- and those were Ukraine-related, right?

Mr. Abrams: Yes.

Question: So why not then sanction Rosneft Oil Company today, like Rosneft Trading Company?

Mr. Abrams: Well --

Question: And then I have one more, but itís brief.

Mr. Abrams: Okay. No sanction should be taken alone. They are part of a campaign of pressure to bring democracy back to Venezuela. And as I said, there will be other sanctions.

As it happens, what is the entity, what is the company that is now handling about 70 percent of Venezuelan oil? Itís Rosneft Trading S.A. What is the company that is engaging in all sorts of tricks and evasions to try to get around U.S. sanctions on Venezuelan oil, the oil sector we sanctioned? Itís Rosneft Trading. So we went after the operational company.

Question: Okay. And then just secondly, you said that there will be more and you just said it again -- there will be more steps further to further pressure in the coming weeks and months, which doesnít exactly suggest that you think that this, todayís action, is actually going to do anything. Right?

Mr. Abrams: No, I think thatís -- I donít think that at all.

Question: I mean, it doesnít sound like youíre particularly optimistic that this is going to be the --

Mr. Abrams: No, I donít -- I think if you -- this is a campaign of pressure and it began about 55 weeks ago --

Question: Yeah, over a year ago.

Mr. Abrams: -- and the pressure continues to mount. I would not say that any individual step can be calculated to bring an end to the crisis, but I think this is a very significant step and I think you will see companies all over the world in the oil sector now move away from dealing with Rosneft Trading.

Question: Okay.

Mr. Brown: Humeyra.

Question: Hello, Mr. Ambassador. Are you worried that Rosneft Trading or overall Rosneft can just set up different shell companies and continue its operations from there? Has the United States closed all the loopholes?

And you also mentioned that Secretary Pompeo has discussed this with his Russian counterpart Lavrov in Munich. What was the response he got from Lavrov? Thank you.

Mr. Abrams: Well, I donít want to characterize Lavrovís remark beyond saying that he heard the message that this sanction was coming and, obviously, we have deep differences over what is happening in Venezuela and what is the way out for Venezuela. Iím sorry, the first part --

Question: The first part was: Are you not concerned that theyíre just going to keep setting up shell companies? Have you closed all the loopholes?

Mr. Abrams: Thatís -- you can say that about any sanction ever imposed. People always try to cheat, and Rosneft Trading Company may try to cheat, but I think they will get less cooperation as they try to do this. There are many companies -- I was talking to an oil trader last week who said: This is very complicated and expensive for us to deal with the U.S. sanctions for -- to pay the lawyers to deal with U.S. sanctions, so our conclusion is we just stay away from companies that are sanctioned. And I think there are a lot of companies that will react in this way.

Iím sure there will be efforts to get around the sanctions. Already Rosneft is doing this, for example, by changing the names of ships or ship-to-ship transfers to try to hide the Venezuelan origin of oil. We talk to, for example, ship owners and tell them, "You should not engage in that kind of activity because itís going to affect your ability to access the United States." We talk to the potential customers. So this is part of a very large American effort. OFAC is very expert at getting after people who try to evade sanctions.

Mr. Abrams: Yeah, David. Sorry, right there. Yeah.

Question: Ambassador, thank you for doing this. I would like to do my question in Spanish, and if you can give the answer in Spanish and English.

Mr. Abrams: Do we do that?

Mr. Brown: Can we keep it in English?

Question: Yeah. Okay.

Mr. Brown: Thanks.

Question: How has changed this strategy from the U.S. to Venezuela the -- those is at first that -- there was at first to have a meeting or better relations between President Trump and Putin. How this strategy with Venezuela, this new political view about that this country has changed that other point?

Mr. Abrams: In part, this is a question probably best addressed to the White House, but I think itís clear that the President is determined to continue and strengthen his policy toward Venezuela.

What weíve seen from Russia in the last year is all negative and all harmful when it comes to Venezuela. If you take Rosneft per se, in the course of the last year, Venezuela paid back a billion eight hundred million dollars of debt owed to Rosneft. So while Venezuela is undergoing the crisis it is undergoing -- the humanitarian crisis, the economic crisis -- what is Russia doing? Siphoning money out. Not giving aid. Siphoning money out -- a billion eight hundred million dollars to Rosneft. Thatís not even the Russian state, which also gets money. That is not a contribution to the people of Venezuela or to a democratic outcome.

Question: Hi. Thanks, Ambassador. How much of the Venezuela oil thatís exported on these illicit channels goes to China and India? I presume that those are two of the largest markets. Also, it was suggested in a call today with senior administration officials that this will not have a dramatic effect on the global oil markets, and yet a few minutes ago it sounded like you were saying that there -- these -- the 90-day unwinding will take some time and some difficulty. So Iím just wondering if you can explain why it is that the administration doesnít think this will have a knock-on effect on oil markets.

And then just very quickly to -- one more thing to clarify. On that same call, I believe it was said that the sanctions were not just going to be imposed on Venezuela-related transactions, that it would be broader than that. Am I understanding that correctly? Thank you.

Mr. Abrams: Yes, on the last part, itís a sanction on the company, Rosneft Trading S.A. and Didier Casimiro. So that sanction does not except other transactions. You would need -- if you were in that situation, you would need to go to OFAC and seek a license to continue those other activities that you may claim are unrelated to Venezuela, and youíd have to make your argument, but the application is to the entire range of activities of Rosneft Trading S.A.

On oil markets, let me be clear: We do not think that this action will affect the price of oil being paid by consumers around the world. Why not? We started sanctions on Venezuelan oil on January 28th of last year. Oil prices are lower today than they were when this campaign started. Weíre not trying to raise oil prices. Weíre trying to diminish the amount of money available to the Maduro regime.

In the course of this year, U.S. oil production is forecast to reach record levels, in excess of 13 million barrels a day, and everybody we have asked in the U.S. Government, the U.S. Energy Information Administration, and outside the government says oil markets are well supplied.

Question: And Iím sorry. China and India?

Mr. Abrams: Ah, sorry.

Question: Thatís okay.

Mr. Abrams: The two largest customers for Venezuelan oil are India and China, in that order. And we will be having conversations with the customers to advise them of U.S. policy with respect to the export of Venezuelan oil.

Mr. Brown: Okay. In the back.

Question: Thanks for having this. So the campaign youíre describing is basically focused on the financials and on putting financial pressure, as you have been doing for some 55 weeks. Is there a geopolitical or strategic component to make it less attractive for Russia, and to a certain degree Turkey and Iran and China, to invest or take risk in Venezuela?

Mr. Abrams: Well, first, the sanctions are certainly a critical part of this campaign, but you have seen other activities. Youíve seen efforts in the United Nations. Youíve seen the formation -- not always by the U.S. obviously -- youíve seen the formation of the Lima Group of Latin American democracies. Youíve seen the formation of the International Contact Group. Youíve seen a number of statements from the EU. Youíve seen Canadian sanctions. Youíve seen the reactivation of the Rio Treaty for sanctions by its signatories. Youíve seen EU sanctions. So there is a lot more than just American economic sanctions here. And we will continue to try to persuade those countries that are supporting and sustaining this regime to diminish their activities.

Mr. Brown: Carol.

Question: What about Chevron? Does this mean that Chevron is likely to not get waivers the next time itís up -- theyíre up for renewal? And when is that?

And one other thing. The sanctioning of ships and companies sending oil to Cuba has not really put a dent in the practice. Do you think these sanctions will have an impact on that, or are you going to have to go to a maritime embargo?

Mr. Abrams: I donít have any announcements to make with respect to Chevron.

Question: Do you know, when are they up?

Mr. Abrams: Oh, sorry. April 22nd.

Question: April?

Mr. Abrams: April 22nd, if I -- Iím pretty sure thatís the right date. It was 90 days from January 22nd.

On Cuba, whatís happened is the vast majority of ship owners around the world will, because of our sanctions, not touch the Venezuela-Cuba oil trade. As a result, what the Venezuelans and Cubans have done is to have a small number of ships that basically just go back and forth and that are Cuban or Venezuelan flagged, because ship owners -- Panamanian flagged, Greek flagged, Isle of Man -- donít want to have anything to do with that trade.

Now thatís a small trade. Thatís probably on average 75,000 barrels a day in the last year, which is to say about 10 percent of the overall trade. And the overall trade, which goes all around the world and ends up mostly in Asia, canít really be segmented off that way. There arenít enough ships that are flagged by Cuba. So they do use ships with many different flags, and our sanctions I think will really reduce the number of ships, the number of ship owners, the number of captains, the number of insurance brokers who will be willing to engage in that trade.

Question: Do you have any inclination that due to your sanctions or this pressure campaign that the Maduro regime is any closer to coming to the table for a negotiation? Are there any current discussions about holding elections? Because this business that you talked about at the airport, that doesnít seem like a regime behaving in a way that seems like theyíre willing to compromise, any time soon at least. And then why donít you think theyíve gone so far as to arrest Juan Guaido himself?

Mr. Abrams: Iíll start with why have they not been willing to arrest Juan Guaido. One has to assume that they have made a cost-benefit calculation that the reaction from countries all over the world -- the U.S., Canada, Latin America, the EU countries -- would be too great. And obviously, we think thatís a correct judgment on their part.

There are discussions all the time -- not by us but by Venezuelans and others, the Norwegians for example -- with the regime. We do not have an active embassy, as you know, in Caracas, but many other countries do, so they talk to regime officials. And I think the regime is trying to figure out what to do.

I think they were surprised by the Guaido visits to Europe and the fact that he met with Merkel and Macron and Johnson and the Dutch prime minister and the EU foreign minister and then Justin Trudeau, and then the State of the Union and the Oval Office here. I think they were thinking "Oh, this guyís fading away." So now they have to figure out what do we do about this, how do we handle this. And they are talking to various foreigners about it, and people give us information about that.

Now, are they willing actually to compromise? Are they willing to have a free election? The 2018 election was not a free election. The last free election was the parliamentary election of 2015, where the regime lost in a landslide. There is no indication yet that they are seriously contemplating allowing the one step that would allow Venezuela to emerge from this crisis -- a free and fair presidential election.

Question: You said that the consequences would be too great. What would those consequences be?

Mr. Abrams: Weíre not going to get into that question.

Mr. Brown: All right. Weíre at two more. Beatriz.

Question: Thank you. After these sanctions, my question is what reaction do you expect from Repsol and if you are still evaluating -- is the U.S. still evaluating sanctions on Repsol, if there has been any conversation with the Spanish Government? Thank you.

Mr. Abrams: As to conversation with the Spanish Government, we asked our European posts to brief a lot of governments yesterday and today, so they would have had some notice. And Iíve seen a few reporting cables indicating that this was done in a lot of different places.

Repsol has always been in compliance with U.S. laws and U.S. sanctions in all its activities, and in our previous conversations with Repsolís representatives -- Repsol people, lawyers -- Repsol has always said weíre a global company that complies with the laws everywhere. So we will have conversations, no doubt, with -- more conversations with Spanish officials and with Repsol, and would expect that, as we move forward, some of Repsolís activities would have to change, and that would be true of other foreign oil companies in Venezuela as well.

Question: What kind of -- just a follow up?

Mr. Brown: Last question right here on the right.

Question: Thank you, Ambassador. I would like to ask you about the non-objections letter that -- from tomorrow, Venezuelans standing and working in the U.S. will be able to request this option. It was approved by the State Department, but itís led by the Embassy of Venezuela. And this is a measure that they were not able to request in the last 10 years since Maduro canceled that option for those Venezuelans who want to stay longer here in the U.S. I would like to have your evaluation.

Mr. Abrams: Yeah, I really donít know about this letter. I donít know what youíre referring to, and perhaps itís just a difference on how to characterize it. But --

Question: The Embassy of Venezuela is leading it.

Mr. Abrams: Yeah. I need to -- I want to read it carefully and talk to probably DHS before I answer you.

Question: Okay, perfect. Thanks.

Question: Just one more question?

Mr. Brown: Thank you.

Mr. Abrams: Thanks.

Question: Can you just say what impact you think this will have on Maduroís finances?

Mr. Abrams: Itíll hurt them.

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