On September 12, the United States and the European Union adopted further economic sanctions against Russia in connection with the ongoing situation in Ukraine.
The sanctions adopted by the United States tightened debt financing restrictions on specifically named Russian entities; implemented additional restrictions on sales of certain goods, services, and technology for oil-related operations, and designated additional Russian entities as Specially Designated Nationals (SDNs).
The new sanctions were primarily enacted through the expansion of OFAC’s “sectoral” sanction directives (initially issued on March 20, 2014 under Executive Order 13662). The U.S. sectoral sanctions now generally prohibit the following:
The provision of new debt financing with maturity greater than 30 days or new equity financing for designated entities, including Bank of Moscow, Gazprombank, Russian Agricultural Bank, Sberbank, Vnesheconombank, and VTB Bank or their subsidiaries, as well as transactions with or dealing in such debt or equity.
The provision of new debt financing with maturity greater than 90 days for designated entities, including Gazprom Neft, Novatek, Rosneft, and Transneft or their subsidiaries, as well as transactions with or dealing in such debt.
The provision of new debt financing with maturity greater than 30 days for Russian Technologies (Rostec) and its subsidiaries, as well as transactions with or dealing in such debt.
The sale, export or reexport, or other provision of goods, services (except financial services), or technology “in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation, or in the maritime area claimed by the Russian Federation and extending from its territory” to designated entities, including Gazprom, Gazprom Neft, Lukoil, Rosneft, and Surgutneftegas or their subsidiaries. (N.B. This prohibition expands the existing U.S. export ban by covering all goods and additionally precluding the provision of U.S. origin technology and technical assistance in respect of Russian deepwater, Arctic offshore, or shale projects. Further, this prohibition applies to existing projects and requires that all U.S. entities withdraw from such projects on or before September 25, 2014. To accommodate the wind down of contracts and operations in effect before this prohibition is issued, OFAC issued General License 2 on September 12, 2014.)
As a result, the existing U.S. export ban now covers all goods, as well as U.S.-origin services, technical assistance, and technology, in respect of such projects. U.S. entities must withdraw from existing projects on or before 25 September 2014 (under OFAC General License 2, which granted a two-week period for winding-down pre-existing contracts and operations).
The U.S. “direct” sanctions have also been expanded, with a number of companies in the Russian defense sector being added to the SDN list. All trading with SDNs and their subsidiaries is generally prohibited.
Together with the expansion of OFAC’s sectoral sanctions, the U.S. Department of Commerce's Bureau of Industry and Security has rolled out new export restrictions.