Rosneft is disappointed by the decision of the EU Court of Justice concerning the estimation of legitimacy of the European sanctions

Rosneft considers the decision of the EU Court of Justice, delivered on the 28th of March, 2017, illegal, groundless and politicized. This decision proves that in Europe the rule of law is being substituted with the rule of politics.

The Court has recognized the legitimacy of sanctions, although the participants of the process could not present any evidence or grounds for its imposition against the Company. Rosneft continues to insist that it has not committed any illegal actions in any jurisdiction of the Company's activities, including Ukraine, and has no links to the Ukrainian crisis.

The Court refused to admit that the EU sanctions were imposed, in particular, to achieve hidden purposes and are, in fact, an instrument of competitive struggle. Nevertheless, the Court could not explain why the limitations, applied under the pretext of Crimea's accession to Russia, involve access of oil companies to international financial markets, oil production at the Arctic shelf, development of tight reserves, deep-water and shale fields. The Company considers that the sanctions imposed against it by the EU states are primarily aimed at increasing risks of busines operations, obstructing implementation of Rosneft's important projects and thus creating preferences for other oil market players.

The Court ignored its own existing precedents when the decision on EU sanctions was revised by the same court due to lack of substantial evidence. For instance Iranian banks included in the EU sanctions list successfully appealed the EU regulation. The Court stated that they are not related to the nuclear program of the IRI that was the object of sanctions and the existence of the close ties to the government is not a satisfactory argument for including them in the list.

The Court refused to acknowledge that unilateral economic sanctions restrict trade by definition and contradict existing provisions of the Partnership and Cooperation Agreement (PCA) between Russia and the EU, signed in 1994. The EU’s decision to impose the sanctions is, in fact, a legitimated refusal to fulfill its obligations under international law.

Rosneft, in turn, considers the principle of obligation of contract performance as an immutable basis for business relationships in Europe that should not be violated due to short-term political situation. Rosneft has always been a reliable partner for European partners and to date provides uninterrupted shipments of oil to Europe in full compliance with its long-term contractual obligations.

The Court did not take into consideration that sanctions inflict economic damage on Rosneft's European partners, which produce technical equipment, on European banks and investment funds, that were cooperating with Rosneft on credit agreements and were willing to invest in development of Russia's petroleum industry. It’s hard to argue against the fact that, like a boomerang, sanctions hit industry and financial sector of Europe.

Being an international public company, Rosneft has its shares listed on Russian and international exchange markets. Shareholders of Rosneft include dozens of thousands individuals, foreigners among them. Its largest shareholder after the Russian government is BP, which owns 19.75% of the Company's shares. Since the end of last year, another 19.5% shares of the Company belong to the international consortium, including Swiss oil trader Glencore and sovereign fund of Qatar. Therefore, almost a half of the Company's shares belongs to international shareholders. Politically motivated sanctions do serious damage to them: sanctions interfere with efficient management’s work, by limiting Rosneft’s access to the financial markets and creating obstacles for implementation of the promising projects.

Despite the fact that convincing argumentation for the sanctions illegitimacy presented by the Company at the EU Court of Justice has been ignored, Rosneft will continue to consistently protect its shareholders’ interests, including those affected by restrictions of the unjustified sanctions, using all available legal means.

Rosneft Information Division
Tel.: 7 (499) 517-88-97
28 March, 2017

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