Since our last update, there have been new sanctions packages implemented by the EU, US, and the UK as Russia’s military aggression against the Ukrainian people and their country continues.
The EU published its seventh sanctions package on the 21st July 2022 (see link) and an eighth sanctions package on 6th October 2022 (see link), following Russia’s illegal annexation of Ukraine’s Donetsk, Luhansk, Zaporizhzhia and Kherson regions. In addition to the implementation of EU Council Regulations, the EU has published a comprehensive Frequently Asked Question (FAQ) (see link) providing guidance on the Regulations.
In Norway the EU’s seventh sanctions package was adopted and entered into force on the 26th of August 2022 and the eighth sanctions package has been adopted in principle on the 14th of October 2022.
We have summarised key developments from the EU’s seventh and eighth sanctions package that will be relevant to our members below:
1. Crude oil and certain petroleum products:
Pursuant to Article 3m of Council Regulation 2022/879, the EU has prohibited the purchase, import or transfer of crude oil and – petroleum products as listed in Annex XXV) from Russia into the EU. The EU has provided a transitionary period for, crude oil with CN Code 2709 00, until 5th December 2022 and petroleum products with CN code 2710, until 5 February 2023. This transitionary period is applicable to “one-off transactions” and the execution of contracts for the purchase, import or transfer of goods that were concluded before the 4th of June 2022.
The EU has stated in the FAQ ‘Oil Imports’ dated 22 June 2022, that “‘one-off transactions for near-term delivery’’ should be understood as spot market transactions. The contract concluded cannot foresee multiple deliveries and the oil should be delivered within 30 days maximum after the transaction has been concluded.”
The FAQ, clarified that the prohibition on EU companies transporting Russian oil by sea “is only prohibited into the Union.” This clarifies that the prohibition in Article 3m will not apply where the goods are exported from Russia to a third country.
However, it is important to note that the FAQ, states that “as set out in Article 3n, the technical assistance, financing or any financial assistance in relation to maritime transport of such products to third countries is prohibited.” This is likely to impact the availability of insurance and reinsurance.
The adoption of the EU’s eighth sanctions package also marks the beginning of the EU’s implementation of the G7 oil price cap. This will mean that European operators will be allowed to transport by sea Russian origin crude oil and petroleum products to third countries, provided its price remains under a pre-set “cap” once the grace periods have expired.
2. Price cap on seaborne Russian origin oil
The G7 and the EU as part of a coalition of countries has agreed on a policy where an exception will be available to the ban on seaborne Russian origin oil so long as it is sold at or below a price cap. The Department of Treasury in the US has published Preliminary Guidance (“U.S. Guidance”) on the Implementation of a Maritime Service Policy and Related Price Exception for Seaborne Russian Oil. Similarly, the EU’s eight sanctions package is the beginning of the implementation within the EU of the G7 agreement on Russian oil exports.
See our overview of the ‘Price Cap’ in this Circular – here.
Link to the Preliminary Guidance from the US Treasury.
Link to the G7 Finance Ministers Statement on the united response to Russia’s war of aggression against Ukraine
3. Agricultural products and fertilizer
An exemption from the prohibition to engage in transactions with certain state-owned entities as regards agricultural products to third countries, including wheat and fertilisers between third countries and Russia, has been extended.
In the EU FAQ dated 22 June 2022 the EU clarified that EU sanctions do not restrict the purchase or import into the EU of agricultural products from Ukraine. Imports of agricultural products originating from non-government-controlled areas of the Donetsk and Luhansk oblasts of Ukraine, Crimea and Sevastopol are possible only if approved by the Ukrainian government. There are exceptions that may apply in case of humanitarian needs.
The EU has provided further clarification with regard to fertiliser in an FAQ dated 19 September 2022, where EU operators appear to be allowed to transfer to third countries (Fertilisers falling under CN codes 310420, 310520; 310560; ex31059020 and ex31059080 related, as listed in Annex XXI) in order “to combat food and energy insecurity around the world and in order to avoid any potential negative consequences therefrom.”
4. Iron, Steel and Coal
Following from the EU FAQ on ‘Import, Purchase, And Transfer of Listed Goods’, the prohibition on the ‘purchase’ and ‘transfer’ of iron and steel (Article 3g) and coal (Article 3j) will apply “irrespective of the final destination of the goods”.
However, the EU subsequently issued an FAQ dated 19 September 2022 clarifying that EU operators (including those providing insurance and brokering services) may assist in the transfer of coal and related products (listed in Annex XXII) to third countries in order “to combat food and energy insecurity around the world and in order to avoid any potential negative consequences therefrom.”
5. Expanded designated lists and financial restrictions
The seventh EU sanctions package adds an additional 54 persons and 10 entities, including Sberbank, who will be subject to restrictive measures. The eighth EU sanctions package adds an additional 30 individuals and 7 entities, including the Russian Maritime Register of Shipping. It is important to check the latest lists for updated names of individuals or entities (see link to EU Sanctions Map). The EU restrictive measures now apply to a total of 1236 individuals and 115 entities.
Press Release from the Council of the EU concerning the seventh sanctions package is available here.
Nordisk has available resources and has expanded its capabilities to provide sanctions and compliance services to its members in the offshore and shipping sectors. Any such queries can be directed to email@example.com or firstname.lastname@example.org.
Nordisk sanctions updates are intended to provide the reader with information on material developments in the specific sanctions program implemented by the UN, US, EU, UK and Norway.
The Nordisk sanctions updates are not intended to constitute legal advice.