The Treasury Department says it won't issue Exxon a waiver to work in Russia

"In consultation with President Donald J. Trump, the Treasury Department will not be issuing waivers to US companies, including Exxon, authorizing drilling prohibited by current Russian sanctions," a statement from Treasury Secretary Steven Mnuchin said.

Earlier this week, the Wall Street Journal's Jay Solomon and Bradley Olson reported that 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. Specifically, to proceed in the Black Sea.

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 includethe 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 Trump's 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 a Congressional investigation into whether there were ties between Trump aids and Russia.

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.

The Journal reported that he is recusing himself from matters involving Exxon for two years, according to the Journal. Moreover, 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."