Russian oil major Rosneft, hit by US sanctions over Moscow's role in the Ukraine crisis, said Monday it had to abandon plans to purchase the oil trading business of US bank Morgan Stanley after failing to win regulatory approval.
The December 2013 deal for an undisclosed amount covered Morgan Stanley’s Global Oil Merchanting business that included agreements on stockage capacity as well as physical oil inventories.
Rosneft said it and Morgan Stanley were abandoning the transaction  "due to an objective impossibility to complete the deal that has arisen as a result of regulatory clearances being refused."
Rosneft said in a statement that both companies regretted having to drop the deal and that they will "continue to cooperate in other spheres".
Meanwhile, Morgan Stanley said it "will now consider a variety of options for the unit that take into account the interests of the firm's shareholders, clients and employees.’’
Rosneft, the top quoted oil company by production volume, is led by Igor Sechin, a confidant of Russian President Vladimir Putin who was placed on US and EU sanctions lists over Moscow's annexation of Crimea and support for separatists in eastern Ukraine.
Rosneft has long affirmed that the sanctions will not affect its cooperation with its principal partners: Britain's BP which holds nearly 20 percent of its capital and US company ExxonMobil.
However ExxonMobil decided several months ago to halt early joint exploration in the Russian Arctic in line with US sanctions.
The project is key to Rosneft's growth strategy.