China refuses oil from Russian companies hit by U.S. sanctions

SINGAPORE (Bloomberg) --The trading arm of a Chinese state-owned refiner is turning away crude from Russian energy giant Rosneft PJSC, the parent of a unit hit by U.S. sanctions.

Sinochem International Oil (Singapore) on Monday sought crude for May-to-June delivery, company documentation seen by Bloomberg shows. While Sinochem didn’t say why it had excluded Rosneft Oil Co. from the tender, it specifies that supplies from the Russian company, plus its subsidiaries and affiliates, will not be accepted. The Singapore unit is procuring barrels for Quanzhou refinery in eastern China, operated by its parent Sinochem Group.

Sinochem’s press office couldn’t immediately comment on the matter when contacted via email. Rosneft wasn’t immediately available to comment.

The Chinese refiner is going a step further than most of its rivals by avoiding dealings with Russia’s largest oil producer, even though such trades aren’t prohibited. U.S. President Donald Trump’s measures targeted a Rosneft unit called Rosneft Trading SA, alleging support of Venezuelan leader Nicolas Maduro and helping to export Venezuelan crude.

There have been other instances where U.S. sanctions have targeted a unit of a company, only for the parent to become embroiled. Late last year, Cosco Dalian, part of Chinese shipping giant China COSCO Shipping Corp. was targeted. For a while, traders stopped booking other COSCO ships.

In the tender document, Sinochem also specified that it wouldn’t accept cargoes from any other U.S.-sanctioned countries such as Iran, Syria and Venezuela. Nor will it buy from Kurdistan, where Rosneft has commercial interests.

In the past, Rosneft has said the U.S. sanctions are illegal, that its operations in Venezuela are commercial, not political, and that other international companies, including American ones, operate there.