US And EU Publish Yet Another Wave Of Russian Sanctions

Investment Services Targeted, Sectoral Sanctions Move Debt Sanctions from 90 to 30 days, Certain Oil Exploration/Production Exports and Services Prohibited

Earlier today, September 12, 2014, the EU and US published yet more sanctions on Russia, increasing the pain particularly in the investment services, defense and oil exploration worlds. Short summaries of the sanctions are provided below, with differences between EU and US sanctions noted.

As this is a rapidly evolving situation, we are not providing background. Please see our earlier alerts (here, here, and here) for additional information and details on previous sanctions.

EU Sanctions

1) Prohibit the sale or supply of dual use items in Annex I to Regulation (EC) No 428/2009 to persons listed in Annex IV, and also prohibit technical assistance, brokering services, other services, financing, and financial services related to same. There is a complicated carve out for the aeronautics and space industry, existing civil nuclear capabilities within the EU and for non military end uses and non military end users. There is also a grandfather provision stating the prohibition is without prejudice to the execution of contracts or agreements concluded before September 12, 2014.

Annex IV lists:

JSC Sirius (optoelectronics for civil and military purposes) OJSC Stankoinstrument (mechanical engineering for civil and military purposes) OAO JSC Chemcomposite (materials for civil and military purposes) JSC Kalashnikov (small arms) JSC Tula Arms Plant (weapons systems) NPK Technologii Maschinostrojenija (ammunition) OAO Wysokototschnye Kompleksi (anti-aircraft and anti-tank systems) OAO Almaz Antey (state-owned enterprise; arms, ammunition, research) OAO NPO Bazalt (state-owned enterprise, production of machinery for the production of arms and ammunition). US Comparison: There is some overlap with the US sanctions, but Annex IV and US entities are not identical, and the US BIS licensing requirement applies to all items subject to US export controls (which includes EAR99 items), not just dual-use control list items.

2) Prohibit the provision of the following services necessary for deep water oil exploration and production, arctic oil exploration and production, or shale oil projects in Russia:

Drilling; Well testing; Logging and completion services; and Supply of specialized floating vessels There is also a grandfather provision stating the prohibition is without prejudice to the execution of an obligation arising from a contract or framework agreement concluded before September 12, 2014 or ancillary contracts necessary for the execution of such contracts.

US Comparison: This provision is both broader and narrower than the US service restrictions below in that: it applies only to certain services (US applies to all services as well as all goods and...