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New US sanctions on Russia target aluminum producer Rusal

Sunday, Apr 08, 2018

   The US is imposing new sanctions against Russian state-owned Gazprom's CEO Alexei Miller, Surgutneftegaz Director General Vladimir Bogdanov, major aluminum producer Rusal, and several other Russian individuals and entities in response to the "totality" of Russia's aggressive actions, including in Crimea, Syria and "ongoing malicious cyber activity," a senior Trump administration official said Friday.

  The sanctions target seven high-profile Russian businessmen, 12 companies they own or control, and 17 senior Russian officials.
  The individuals and companies on the list are effectively banned from the US banking system. The measure prohibits US citizens from dealing with them, and freezes any of their assets that are subject to US jurisdiction.
  The official said the new actions are designed to target senior Russian officials and oligarchs in President Vladimir Putin's inner circle to increase pressure on his government.
  "We anticipate an impact," the official told reporters on a background White House call, speaking on condition of anonymity. "This imposes a new level of cost.
  "The individuals and companies in question will see the consequences of this in the near term and will also have to adjust their planning in the future for anticipating the kinds of consequences that will follow if the Russian state stays on the same aggressive course," the official added.
  A spokesperson for Rusal told Platts Friday that "Rusal is aware of its inclusion in the OFAC's SDN List. The company regrets this development and is currently analysing the situation with its legal advisors."
  Rusal is a Russian aluminum producer, owned and controlled by EN+ Group. Oleg Deripaska, one of the Russians sanctioned, is the owner of the EN+ Group.
  According to Census Bureau data, the US imported 693,125 mt of unwrought aluminum from Russia in 2017, making Russia the third-largest importer in that category. Russia is the fourth-largest US import source for all aluminum products, accounting for 744,266 mt in 2017.
  Joe McMonigle, an oil analyst for Hedgeye Potomac Research and former Department of Energy chief of staff, said he does not expect the new sanctions to impact oil or natural gas flows or reduce Russian production.
  "The Russians have proven resilient to previous sanctions more targeted to the industry," he said.
  Other officials targeted by Treasury for operating in Russia's energy sector include:
  **Sergey Fursenko, a member of Gazprom Neft's board of directors, for being an official in the Russian government.
  **Igor Rotenberg, who Treasury said acquired significant assets from his father, Arkady Rotenberg, after the father was sanctioned in March 2014. "Specifically Arkady Rotenberg sold Igor Rotenberg 79% of the Russian oil and gas drilling company Gazprom Burenie," Treasury said. "Igor Rotenberg's uncle, Boris Rotenberg, owns 16% of the company." Boris Rotenberg was also sanctioned in March 2014.
  **Kirill Shamalov, who is married to Putin's daughter Katerina Tikhonova. Treasury said he acquired a large portion of shares in Sibur, a Russia-based company involved in oil and gas exploration, production, processing, and refining within 18 months of the marriage. A year later, Treasury said, he was able to borrow more than $1 billion through a loan from state-owned Gazprombank. The same year, Putin associate Gennady Timchenko, who is also under US sanctions, sold an additional 17% of Sibur's shares to Shamalov, Treasury said. "Shortly thereafter, Kirill Shamalov joined the ranks of the billionaire elite around Putin," Treasury said.
  **Oleg Deripaska, who "has been investigated for money laundering, and has been accused of threatening the lives of business rivals, illegally wiretapping a government official, and taking part in extortion and racketeering," Treasury said.

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