The EU adopted amendments to the current EU sanctions against Russia on 4 December 2014. These amendments are implemented via Council Regulation (EU) No 833/2014 (as amended) (“Regulation 833/2014”). They are intended to both provide additional clarity on the scope and application of restrictions regarding oil exploration and production projects in Russia and provide a number of carve outs to the existing restrictions on making new loans or credit with a maturity exceeding 30 days available to certain Russia entities after 12 September 2012.

The amendments do not introduce new sanctions nor widen the scope of existing sanctions. They were adopted by Council Decision 2014/842/CFSP and Council Regulation (EU) No 1290/2014 (the “New Regulation”) and came into force on 6 December 2014.

The key elements of the amendments are as follows:

  • The New Regulation clarifies what is meant by “deep water” and “arctic” oil exploration and production, as well as “shale oil projects” by replacing the wording “deep water oil exploration and production, arctic oil exploration and production, or shale oil projects” used in the restrictions targeting Russia’s energy sector in Articles 3 and 3(a) of Regulation 833/2014 with the following more specific: “oil exploration and production in waters deeper than 150 metres; oil exploration and production in the offshore area north of the Arctic Circle; or Projects that have the potential to produce oil from resources located in shale formations by way of hydraulic fracturing. It does not apply to exploration and production through shale formations to locate or extract oil from non-shale reservoirs”.

The following table therefore illustrates the changes made by the New Regulation:

Click here to view the table.

  • The New Regulation clarifies that the measures against the Russia energy sector, contained in Articles 3, 3a and 4(3) of Regulation 833/2014, apply to Russia including its Exclusive Economic Zone and Continental Shelf.
  • The New Regulation clarifies that the derogations in Regulation 833/2014 applying to contracts or agreements concluded before a specified date1 also apply to ancillary contracts necessary for the execution of such contracts.
  • The previous carve out in Article 5 of Regulation 833/2014 from the prohibition on making or participating in loans or credit with a maturity of greater than 30 days for the purpose of financing non-prohibited imports or exports has also been extended so that it applies not only to trade between the Union and Russia but also to trade between the Union and any third State. This new scope expressly includes “expenditure for goods and services from another third State that is necessary for executing the export or import contracts”.
  • The existing prohibition on making new loans or credit with a maturity exceeding 30 days available to certain Russia entities after 12 September 2012, shall not apply to any drawdown or disbursements made under a contract concluded before 12 September 2014 subject to the following conditions:
    • that all the terms and conditions of such drawdown or disbursements (including provisions concerning the length of the repayment period, the interest rate applied or the interest rate calculation method and the maximum amount) were agreed before 12 September 2014, and were not modified on or after that date; and
    • that before 12 September 2014, a contractual maturity date was fixed for the repayment in full of all funds made available and for the cancellation of all the commitments, rights and obligations under the contract.