The U.S.-based oil giant ExxonMobil has challenged the decision of the Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department that imposed a fine on the company for violating the sanctions against Russia, the company said in a statement on July 20, 2017.

The U.S. Department of the Treasury fined ExxonMobil a total of two million dollars for violating anti-Russian sanctions related to Ukraine. OFAC’s statement said that the company was punished for signing eight documents in May 2014 with the president of Rosneft Igor Sechin, who had been included on the American sanctions list. The divisions of the U.S. company involved in the deals with Rosneft are ExxonMobil Development Co. and ExxonMobil Oil Corp.

The U.S. State Department later said that the former head of ExxonMobil and the U.S. Secretary of State Rex Tillerson did not participate in the Treasury Department’s imposition of penalties against the company.

Mr. Tillerson has worked in ExxonMobil for about 40 years. From 2006 to 2016 he was the chairman of ExxonMobil’s board of directors. In the late nineties he was responsible for ExxonMobil’s projects in Russia. In 2011, as the head of the company, he made the agreement on Arctic drilling with Rosneft, repeatedly holding negotiations with President Vladimir Putin. In 2013, he was awarded the Russian Order of Friendship. As the head of ExxonMobil, he spoke out against the anti-Russian sanctions.

During the timeframe referred to in OFAC’s decision, the head of Rosneft signed a contract for extending operations on the Far East LNG project with the president of ExxonMobil Development Neil Duffin. Additionally, Mr. Sechin and the president of ExxonMobil Russia Glenn Waller executed an agreement between the two companies for the provision of drilling, production, preparation, transportation, storage, and loading services by the Sakhalin-I consortium. The agreement covered hydrocarbon production from the northernmost tip of the Chayvo field.

ExxonMobil called OFAC’s measure as “fundamentally unfair,” as each of the contracts signed related to Rosneft’s business that had not been sanctioned by the U.S. ExxonMobil argued that OFAC gave permission to BP’s head Robert Dudley to participate in Rosneft’s board meetings involving Mr. Sechin for the reason that the board meetings had no relation to Mr. Sechin personally.

The company also noted that OFAC retroactively applied a new interpretation of the sanctions order that was incompatible with certain unambiguous statements from the White House and the Treasury that were published and still publicly available.

The Texas-headquartered ExxonMobil is the largest private oil company in the world. ExxonMobil has worked in Russia for more than 20 years in geological exploration and production (upstream), as well as in processing and marketing (downstream).

In January 2011, ExxonMobil signed an agreement with Rosneft on joint development of the Black Sea shelf. In September 2014, Rosneft and ExxonMobil jointly discovered a new field at the East Prinovozemelsky-1 site in the Kara Sea, which was called Victory. The state commission on reserves estimated the field’s reserves at 130 million tons of oil and 499 billion cubic meters (17.62 tcf) of gas.

After the introduction of U.S. sanctions against Russia in 2014, the company has been forced to stop working on a number of projects within the agreement on strategic cooperation with Rosneft. However, ExxonMobil remained involved in the Sakhalin-I project (ExxonMobil and Japanese company Sodeco have 30 percent each, while Rosneft and the Indian entity ONGC have 20 percent each) on developing the oil and gas fields of Chayvo, Odoptu, and Arkutun-Dagi. Potential recoverable reserves at the three fields are estimated approximately at 307 million tons of oil and 485 billion cubic meters (17.12 tcf) of gas.

In April 2017, OFAC refused to grant ExxonMobil a license to work on sanctions-targeted projects. The Treasury office denied the company’s application for a license to allow it to drill jointly with Rosneft at specific sites. At the same time, in 2015 and 2016, Exxon actually received permission from the U.S. authorities for limited administrative action within its partnership with Rosneft.