Exxon Mobil asked the Treasury for a waiver from sanctions to work with Russia

Exxon Mobil Corp. applied to the Treasury Department for a waiver from sanctions on Russia in an effort to restart its joint venture with state oil company PAO Rosneft, according to the Wall Street Journal's Jay Solomon and Bradley Olson.

The firm applied for a waiver to proceed in the Black Sea, according to people familiar with the matter.

The Obama administration previously issued an executive order that imposed sanctions on Russia in response to the country's actions in Ukraine. Part of the sanctions leveled on Russia include the prohibition of technology transfers in Russian energy projects in the Arctic, Siberia, and the Black Sea. Sanctions also prohibit dealings with Rosneft CEO Igor Sechin.

Throughout the campaign season, US President Donald Trump advocated improving relations with Russia. After his election, analysts believed that there was possibility that the sanctions imposed on Russia over Ukraine could be lifted, which theoretically would have major implications for energy. Russian president Vladimir Putin was one of the first leaders to publicly send his congratulations after his win.

However, the prospects of improving relations between Russia and the US have somewhat faded recently following the US strike on Syria and the launching of an investigation into whether there were ties between Trump aids and Russia by Congress.

Notably, US Secretary of State Rex Tillerson is the former CEO of Exxon. He has close personal ties with Russia, has struck several major deals with Rosneft in the past, and received the Order of Friendship award from President Vladimir Putin in 2013.

He is reportedly recusing himself from matters involving Exxon for two years, and the Journal added that it's unclear whether the request to the Treasury Department came before or after Tillerson joined the administration.

Exxon and Rosneft signed a landmark deal in 2012 under Tillerson's leadership to explore Russia's arctic and its portion of the Black Sea, as well as drill in Siberia.

One key casualty of the sanctions on Russia ended up being the Kara Sea inside the Arctic Circle (not to be confused with the Black Sea). Back in September 2014, Rosneft discovered oil there with Exxon, however, due to the sanctions, they could not continue the landmark joint exploration. This proved to be problematic for both parties: Rosneft does not have the technological ability to drill in cold offshore conditions by itself, while Russia was Exxon's second-biggest exploration area at the time.

Tillerson's close relationship with Russia and Putin has previously led to speculation that as secretary of state, he could push for sanctions on Russia to be lifted - allowing Exxon's Arctic agreement with Rosneft, reported to be worth $500 billion, to proceed. Meanwhile, the head of the Exxon's operations in Russia, Glenn Waller, said last April that the company will return to its joint project with Rosneft once sanctions against Moscow are lifted.

In his confirmation hearing, Tillerson testified, "I never lobbied against the sanctions. To my knowledge, Exxon Mobil never lobbied against the sanctions. Exxon Mobil participated in understanding how the sanctions were going to be constructed. And was asked and provided information regarding how those might impact American business interest."

A "person familiar with the matter" told the Journal that Exxon has been seeking permission from the US to drill in areas affected by sanctions since late 2015.

Regarding the Black Sea region, the Journal also reported that Exxon "needs" a discovery of oil the area by the end of the year in order to receive a license from the Russian government to drill under the terms of the Rosneft deal, according to the WSJ. A "person briefed with the company's waiver application" said that "Exxon is worried it could get boxed out of the Black Sea by the Italians."

Check out the full report at the WSJ here.

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