Source: Berlin wants to protect Rosneft Germany's arm from US sanctions

A person with direct knowledge about the discussions in the German government said that Germany was seeking exemptions from U.S. Sanctions on the German operations of Rosneft, the Russian oil company. This came after the banks warned they could be prevented from dealing with local energy suppliers due to the sanctions.

Rosneft’s German business is owned by Russia but controlled by German authorities. It is Europe's largest economy's key oil supplier, routing the oil and refining it to fuel pumps and airports.

After Russia's invasion of Ukraine in full force, the German branch of Rosneft was placed under government trusteeship. This shook decades-long energy relations with Moscow.

According to a spokesperson from Germany's Economy Ministry, U.S. sanctions shouldn't apply to Rosneft Germany because the company is decoupled and under German control.

Rosneft, as well as the U.S. Treasury, did not respond immediately to a comment request.

The U.S. president Donald Trump has imposed sanctions against Russia this week. He targeted Rosneft, and Lukoil. This comes amid a growing frustration over the Russian president Vladimir Putin's refusal to agree to a ceasefire agreement in Ukraine.

Trump's decision to sanction Russia's largest oil companies is a significant policy shift. He had previously resisted calls from the international community for new sanctions in response to Russia's conflict in Ukraine.

The United States sanctions follow the same move made by Britain last week to sanction Rosneft, and Lukoil.

Few days later, London granted a special license allowing companies to work with Rosneft's German subsidiaries, on the basis that they were controlled by the German government. The source claimed that the German government had lobbied for this.

The United States has the most powerful sanctions authority because it can target the banks that work with companies on the blacklist, cutting off their access to dollars, which is a cornerstone in international finance.

Any bank would be in a crisis if they lost access to U.S. dollars.

Berlin has so far resisted nationalising Rosneft, choosing instead to maintain control de facto via a trust that leaves legal ownership with the Russians. (Additional reporting from Christoph Steitz, Miranda Murray and Rachel Armstrong; editing by Elaine Hardcastle and Rachel Armstrong)

(source: Reuters)