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Congress renews Russia energy sanctions push after Trump-Putin summit

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Congress renews Russia energy sanctions push after Trump-Putin summit

Washington — Amid growing speculation that President Donald Trump could weaken US sanctions on Russia's oil sector, US congressional leaders are pushing legislation to strengthen sanctions on Russian export pipelines and joint ventures with Russian oil and natural gas companies.

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These efforts, still in their early stages in the House and Senate, could increase investment risk in Russia's oil and gas sector and, potentially, hinder some export growth, analysts said this week.

"There are obvious and mounting concerns about Russia's malicious interference in US democratic institutions and processes," said Elizabeth Rosenberg, director of the energy program at the Center for a New American Security in Washington. "There's a real grasping for straws about what else you can do, when it's clear there's an evidentiary basis for our concerns."

It remains unclear if Trump and Russian President Vladimir Putin discussed sanctions during their summit in Helsinki on Monday and the White House has refused to comment if sanctions were brought up. Trump's refusal to confront Putin over election meddling or forcefully blame Russia for interfering in the 2016 election has driven the renewed push for additional sanctions.

"We can ratchet up sanctions on Russia, not water them down," said Senate Minority Leader Chuck Schumer, Democrat-New York.

On Thursday, House Democrats introduced the Secure America from Russian Interference Act which would strengthen sanctions on Russia's energy sector.

"With President Trump refusing to confront Russia over its ongoing interference in our elections, Congress must step up and take action," House Democratic Whip Steny Hoyer, Democrat-Maryland, said Thursday.

The bill, among other provisions, would prohibit the Trump administration from granting waivers and special licenses which would allow companies to get around Obama administration-era prohibitions on Russian oil and gas agreements.

"It is clear that the president should not have this authority," said Representative Maxine Waters of California, the top Democrat on the House Financial Services Committee, on Thursday.

On Thursday, New Jersey Senator Bob Menendez, the top Democrat on the Senate Foreign Relations Committee, announced he planned to soon introduce legislation which would increase sanctions on Russia's energy sector.

"We cannot wait to see if Russia attacks the 2018 election," Menendez said on the Senate floor Thursday. "We know it is a reality and we need to ramp up the pressure now."

On Wednesday, Senator John Barrasso, Republican-Wyoming, and chairman of the Senate Environment and Public Works Committee, introduced a bill which would impose mandatory sanctions on Russia's Nord Stream 2 pipeline.

On Tuesday, Senate Majority Leader Mitch McConnell, Republican-Kentucky, said "there's a possibility," that the Senate would take up a bill from senators Marco Rubio, Republican-Florida, and Chris Van Hollen, Democrat-Maryland, known as the DETER Act, which would impose new sanctions against Russia.

The sanctions, which would target Russia's finance, energy, defense, and metals and mining sectors, would be imposed if the director of national intelligence determines that Russia again has interfered in a US election.

Rosenberg, a former sanctions adviser at the Treasury Department during the Obama administration, said Congress target joint ventures between European and Asian companies in Russia, particularly offshore projects. They may also work to make mandatory discretionary sanctions provisions in the Countering America's Adversaries Through Sanctions Act. That bill, which Congress overwhelming passed last summer and Trump reluctantly signed into law, prevents sanctions on Russia from being terminated or waived without congressional review.

Still, sanctions legislation may be difficult to move through the current Congress, due to limited floor time and competition from other legislative efforts, Rosenberg said.

These sanctions efforts may become more likely when the next Congress begins in January, particularly in Democrats take control of the House or Senate, she said.

Western sanctions have not yet hit Russian crude production and export volumes. Output volumes only dropped when Russia signed up to a deal with OPEC to reduce crude production.

The sanctions do not target Western companies' involvement in projects that were already producing oil and this has allowed key projects involving Western investment to continue as normal. This includes ExxonMobil's involvement in Sakhalin 1, Shell's in Sakhalin 2, Total's in Kharyaga and most of BP's cooperation with Rosneft.

--Brian Scheid, brian.scheid@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com