On 5 December, the EU published Council Regulation (EU) 1290/2014 which amends and clarifies the sanctions against Russia set out in Council Regulation (EU) 833/2014 (“Regulation 833”), (as amended by Council Regulation (EU) 960/2014 (“Regulation 960”)).

The new regulation has introduced some additional clarity to the scope of the restriction on making or being part of any arrangement to make new loans or credit with a maturity exceeding 30 days after 12 September 2014 to certain designated Russian banking, defence and oil industry entities and their non-EU subsidiaries (“Designated Entitles”). It introduces a new exemption for loans made pursuant to revolving and multi-tranche credit facilities which were entered into before 12 September 2014, provided that:

  1. all of the terms and conditions applicable to post-12 September 2014 drawdowns under the facility (such as the repayment period, interest rate, maximum amount etc) were agreed before 12 September 2014 and have not been modified on or after 12 September 2014; and
  2. before 12 September 2014, the facility included a contractual maturity date by which all funds must be repaid and all rights and obligations created by the facility would expire.

The EU has also expanded one of the exceptions to providing new loans or credit with a maturity exceeding 30 days. Previously, the exemption applied to loans or credit that provided financing for non-prohibited imports or exports of goods and non-financial services between the EU and Russia. The new regulation has extended this exemption to include such loans or credit between the EU and any third state, including expenditure from another third state that is necessary to execute export or import of such contracts.

The new regulation also provides clarification with regards to the restrictions on providing goods and services for certain oil exploration and production projects.

First, the EU has extended all references to Russia to include Russia’s Exclusive Economic Zone and Continental Shelf as well.

Second, the EU has replaced the terms “deep water”, “arctic” and “shale oil projects”, which are the types of oil exploration and production subject to particular restrictions, with the following phrases:

  1. “waters deeper than 150 metres”;
  2. “the offshore area north of the Arctic Circle”; and
  3. “projects that have the potential to produce oil from resources located in shale formations by way of hydraulic fracturing”.

The EU also clarified that exploration and production through shale formations to locate or extract oil from non-shale reservoirs is not subject to the same restrictions as the above categories.

Finally, in connection with the export of dual-use goods and technology, the EU has  extended one of the exemptions to the prohibition. Previously, the EU had prohibited export of dual-use goods and technology for military use or a military end-user under Regulation 833. Regulation 960 subsequently prohibited all exports of dual-use goods and technology. However, both Regulation 833 and Regulation 960 included an exemption to the prohibition where export of dual-use goods would concern the execution of contracts concluded before 1 August 2014 (under Regulation 833) and before 12 September 2014 (under Regulation 960). The EU has now extended the exemption to include ancillary contracts necessary for the execution of contracts concluded before 12 September 2014.

On 29 November, the EU expanded the asset freeze and travel ban which were originally imposed by Council Regulation (EU) No. 269/2014 and Council Decision 2014/145/CFSP in respect of actions undermining the territorial integrity, sovereignty and independence of Ukraine.  Council Implementing Regulation (EU) No. 1270/2014 imposes additional restrictions on individuals and entities that are said to be separatists involved in the disputed elections in Eastern Ukraine. Five entities are designated along with 13 senior members. The entities are organisations which presented candidates in the elections.

They are: (1) Donetsk Republic; (2) Peace to Luhansk Region; (3) Free Donbass; (4) People’s Union; and (5) Luhansk Economic Union.

The individuals and entities will become subject to asset freezes and travel bans under Council Decision 2014/855/CFSP.