Introduction

The new sanctions agreed by the EU have now been implemented. The sanctions include further restrictions on access to EU capital for five major Russian state-owned banks, as well as three major Russian defence companies and three major energy companies. The list of individuals subject to visa bans and asset freezes has also been expanded. Also the US and Canada have expanded their sanctions.

European Union

Current status

On August 30, 2014, the European Council requested the Commission to urgently undertake preparatory work and present proposals for consideration so as to enhance the EU’s restrictive measures. As a result, on September 8, 2014, the Council of the European Union (‘the Council’) adopted enhanced measures related to access to capital markets, defence, dual use goods, and sensitive technologies. These measures came into force on September 12, 2014.

With these measures the European Council agreed to reinforce the economic sanctions adopted on July 31, 2014 (Decision 2014/659/CFSP and Regulation 960/2014). The measures strengthen the restrictions on access to EU capital for five major Russian state-owned banks, as well as three major Russian defence companies and three major energy companies by prohibiting trade in new bonds, equity or similar financial instruments with a maturity exceeding 30 days, issued by them. A new ban has been introduced to prohibit, subject to certain caveats, directly or indirectly making or being part of any arrangement to make new loans or credit with a maturity exceeding 30 days to them after September 12, 2014. The export ban for dual use goods and technology for military end users has been reinforced as well to also include a list of nine mixed defence companies and Russian access to certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects has been curtailed.

In addition, the European Council agreed to expand the designation criteria with a view to targeting persons and institutions dealing with the separatist groups in the Donbass region and to add 24 individuals to the list of persons subject to visa bans and asset freezes (Decision 2014/658/CFSPRegulation (EU) 959/2014 and Regulation (EU) 961/2014). This brings the total number of individuals and entities under EU restrictions over the situation in Ukraine to 119 individuals and 23 legal entities.

As mentioned, these sanctions build on those agreed on July 31, 2014, when the Council imposed economic sanctions aimed at entire sectors of the Russian economy, so-called “third stage measures” (Decision 2014/512/CFSP and Regulation (EU) 833/2014). These sanctions target in particular the following sectors: capital markets, defence, dual use goods and sensitive technology (for the energy sector). They are aimed at restricting Russia’s access to EU capital markets. EU nationals and companies were prevented from selling or buying new bonds, equity or similar financial instruments with a maturity exceeding 90 days, issued by state-owned Russian banks, development banks, their subsidiaries and those acting on their behalf. Services related to the issuing of such financial instruments, such as brokering, were also prohibited.

At that time, the EU also agreed an embargo on the import and export of arms and related material from/to Russia as well as a prohibition on exports of dual use goods and technology for military use in Russia or to Russian military end-users.

Finally, through the third stage measures, exports of certain energy-related equipment and technology to Russia were made subject to prior authorization and export licenses are to be denied if products are destined for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia.

On July 30, 2014, the Council had already agreed on trade and investment restrictions for Crimea and Sevastopol (Decision 2014/507/CFSP and Regulation (EU) 825/2014). These comprise a ban on new investment in Crimea and Sevastopol for infrastructure projects in the transport, telecommunications and energy sectors and in relation to the exploitation of oil, gas and minerals. Key equipment for the same six sectors may not be exported to Crimea and Sevastopol and finance and insurance services for such transactions must not be provided. The Council also agreed to add 8 persons and 3 entities to the list of those subject to an asset freeze and a visa ban, inter alia, for providing support to or benefiting from Russian decisions makers responsible for the destabilisation of Eastern Ukraine and the illegal annexation of Crimea (Decision 2014/508/CFSP and Regulation (EU) 826/2014). This brought the total number of individuals subject to sanctions in connection with the crisis in Ukraine to 95 individuals and 23 legal entities.

Previously, the Council had already imposed asset freezes and visa bans on 87 individuals and asset freezes on 20 entities (9 entities responsible for action against Ukraine’s territorial integrity and 11 entities in Crimea and Sevastopol which are confiscated or that have benefited from a transfer of ownership contrary to Ukrainian law). On 25 July, 2014, the Council extended the list of persons subject to sanctions (Decision 2014/449/CFSP and Regulation (EU) 810/2014).

Furthermore, imports into the EU of goods originating in Crimea or Sevastopol have been banned and the provision of financing or financial assistance as well as insurance and reinsurance related to the import of such goods has been prohibited by the Council (Decision 2014/386/CFSP and Regulation (EU) 692/2014). In addition, the EU Heads of State and Government (the European Council) also requested the European Investment Bank to suspend the signature of new financing operations in Russian while EU member states coordinate their positions within the Board of Directors of the European Bank for Reconstruction and Development with a view to suspending financing of new operations in Russia.

Summary of current measures

In summary, the restrictions imposed by the EU to date and which are directly applicable in all Member States can be summarized as follows:

  • Prohibition to invest in the following sectors in Crimea and Sevastopol: infrastructure projects in the transport, telecommunications and energy sectors and in relation to the exploitation of oil, gas and minerals. Key equipment for the same six sectors may not be exported to Crimea and Sevastopol and finance and insurance services for such transactions must not be provided.
  • EU nationals and companies are prevented from selling or buying new bonds, equity or similar financial instruments with a maturity exceeding 30 days issued after September 12, 2014, by the listed entities. Services related to the issuing of such financial instruments, such as brokering, are also prohibited. EU nationals and companies are prohibited from providing loans or credit with maturity exceeding 30 days after September 12, 2014, to the listed entities.
  • Import and export of arms and related material to/from Russia is subject to embargo.
  • Prohibition to export dual use goods and technology for military use in Russia or to Russian military end-users.
  • Exports of certain energy-related equipment and technology to Russia subject to prior authorization. Export licenses will be denied if products are destined for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia. Russian access to certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects curtailed.
  • Member States shall take the necessary measures to prevent the entry into, or transit through, their territories of:
  1. natural persons responsible for actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, or stability or security in Ukraine; or which obstruct the work of international organizations in Ukraine, and of natural persons associated with them.
  2. natural persons supporting, materially or financially, or benefiting from, Russian decision-makers responsible for the annexation of Crimea or the destabilisation of Eastern-Ukraine.
  3. natural persons conducting transactions with the separatist groups in the Donbass region of Ukraine
  • All funds and economic resources belonging to, owned, held or controlled by
  1. natural persons responsible for actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, or stability or security in Ukraine; or which obstruct the work of international organizations therein, and natural or legal persons, entities or bodies associated with them;
  2. legal persons, entities or bodies supporting, materially or financially, actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine;
  3. legal persons, entities or bodies in Crimea or Sevastopol whose ownership has been transferred contrary to Ukrainian law, or legal persons, entities or bodies which have benefited from such confiscation;
  4. natural or legal persons, entities, or bodies supporting, materially or financially, or benefiting from, Russian decision-makers responsible for the annexation of Crimea or the destabilisation of Eastern-Ukraine,
  5. natural or legal persons, entities or bodies conducting transactions with the separatist groups in the Donbass region of Ukraine.
  • No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies, involved in the above mentioned actions or to or for the benefit of natural or legal persons, or entities or bodies associated with them.
  • It shall be prohibited to import into the European Union goods originating in Crimea or Sevastopol as well as to provide directly or indirectly, financing or financial assistance (including insurance or reinsurance) related to the import of such goods.

Background

The first stage of sanctions against Russia had been initiated on March 6, 2014. The European Council held an extraordinary meeting and underlined that a solution to the crisis must be found through negotiations between the Governments of Ukraine and Russia. The decision was taken to suspend bilateral talks with Russia on visa matters and discussions on the New (EU-Russia) Agreement. Instead of the G8 summit in Sochi, a G7 meeting was held in Brussels on 4/5 of June. EU countries also supported the suspension of negotiations over Russia’s joining the OECD and the International Energy Agency. In addition, a re-assessment of EU-Russia cooperation programmes is currently on-going with a view to suspending the implementation of EU bilateral and regional cooperation programmes.

On March 17, 2014, following the referendum in Crimea, the Council proceeded to a second stage of restrictive measures by adopting Decision 2014/145/CFSP and Regulation (EU) 269/2014. These are directed against persons responsible for actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine as well as persons and entities associated with them. In this regard, 21 persons were identified and targeted with a travel ban and a freeze of their assets within the EU. The EU also strongly condemned the holding of an illegal "referendum" in Crimea on joining Russia and stated that it does not recognise its outcome. On March 21, 2014 the Council expanded the list of targeted individuals by adding 12 persons (Decision 2014/151/CFSP and Regulation (EU)  284/2014).

At its meeting of April 28, 2014, the Council added 15 individuals to the list of persons subject to sanctions against actions undermining Ukraine's territorial integrity (Regulation (EU) 433/2014 implementing Regulation (EU) 269/2014). Following this set of sanctions the total number of Ukrainian and Russian citizens subject to sanctions therefore amounted to 48.

In connection with embezzlement of Ukrainian public funds, on April 14, 2014, four additional persons had been added to the asset freeze (Decision 2014/216/CFSP and Regulation (EU) 381/2014). Previously, the Council had adopted Decision 2014/119/CFSP, which provides for the freezing of funds and economic resources of former President Viktor Yanukovych and 17 other prominent former government ministers, senior officials and businessmen. This Decision shall apply until March 6, 2015. On March 5, 2014, the Council published Regulation (EU) 208/2014, which reiterates the framework set out in the Decision and provides further definition on the scope of restrictions.

On May 12, 2014, the Council broadened EU sanctions against actions undermining Ukraine’s territorial integrity, sovereignty and independence (Decision 2014/265/CFSPRegulation (EU) 477/2014 andRegulation (EU) No 476/2014). At its meeting in Brussels, the Council decided to expand the criteria for EU restrictive measures to target natural and legal persons. Furthermore, the Council provided a legal basis for asset freezes on entities in Crimea and Sevastopol whose ownership has been transferred contrary to Ukrainian law or on entities which have benefited from such confiscation. As a result, the agreed list includes two Crimean energy companies (PJSC Chernomorneftegaz and Feodosia). The Council decided as well to add 13 natural persons to the list of those subject to a travel ban and an asset freeze bringing the total number of persons subject to sanctions in connection with the crisis in Ukraine to 61.

In addition, the Council declared the independence referenda held on May 11, 2014, in two Southern regions of Ukraine to be illegitimate and illegal and stressed that it does not recognise their outcome.

On May 28, 2014, Regulation (EU) 577/2014 was adopted in order to amend the identifying information (mainly introduction or amendment of the date of birth, correction of names or introduction of addresses) for seventeen persons and the two above mentioned entities included in the list of persons, entities and bodies subject to restrictive measures.

On June 23, 2014, imports into the EU of goods originating in Crimea or Sevastopol were banned and the provision of financing or financial assistance as well as insurance and reinsurance related to the import of such goods was prohibited by the Council (Decision 2014/386/CFSP and Regulation (EU) 692/2014). In addition, the EU Heads of State and Government (the European Council) also requested the European Investment Bank to suspend the signature of new financing operations in Russian while EU member states coordinate their positions within the Board of Directors of the European Bank for Reconstruction and Development with a view to suspending financing of new operations in Russia.

On July 16, 2014 the European Council agreed to expand the designation criteria with a view to targeting legal persons, entities or bodies that are materially or financially supporting actions undermining or threatening Ukraine’s sovereignty, territorial integrity and independence.

On July 18, 2014 the Council adopted measures to amend the designation criteria (Decision 2014/475/CFSPand Regulation (EU) 783/2014), set under Regulation (EU) 269/2014, which until then only covered natural persons responsible for actions or policies which undermine or threaten Ukraine’s sovereignty, territorial integrity and independence or legal persons, entities or bodies associated with them. Under the new measures the Council is now allowed to target undertakings, non-associated with designated individuals or companies, which support, materially or financially, the above mentioned actions.

Further to this, on July 25, 2014, the EU Member States agreed to further extend the designation criteria in the legal basis for the sanctions (Decision 2014/499/CFSP and Regulation (EU) 811/2014). In this regard, those persons and entities that actively support or are benefiting from Russian decision-makers responsible for the annexation of Crimea or the destabilization of Eastern Ukraine may also be subject to asset freezes and visa bans.

Canada

The Canadian government has taken further action against Russia by adding designated persons to theSpecial Economic Measures (Russia) Regulations, where the Canadian government considers there are reasonable grounds to believe that the designated person has been involved, either directly or indirectly, with the violation or attempted violation of the sovereignty of Ukraine. The Canadian government also added restrictions on debt and equity financing.

The Canadian government enacted the Special Economic Measures (Russia) Regulations, SOR/2014-58 on March 17, 2014 and has since amended the regulations several times most recently on September 16, 2014(SEMA Russia Regulations). The SEMA Russia Regulations contain three schedules of designated persons, and there are different prohibited activities in relation to each schedule.

There are 66 designated individuals and 32 designated entities listed under Schedule 1, which freeze the assets of, and prohibit the following actions by any person in Canada, or by any Canadian outside of Canada:

  • dealing in any property, wherever situated, of a Schedule 1 designated person;
  • entering into or facilitating, directly or indirectly, any financial transaction related to a dealing with any property of a Schedule 1 designated person;
  • providing financial or other services related to a dealing with any property of a Schedule 1 designated person;
  • making any goods, wherever situated, available to a Schedule 1 designated person; or
  • providing financial or other related services to or for the benefit of a Schedule 1 designated person.

There are certain exceptions to the prohibited actions, where the transaction involves a payment due under a contract that was entered into before the person became a designated person, a loan repayment made to a person in Canada or a Canadian outside Canada of a loan entered into before the designated person was listed in Schedule 1, a transaction to an international organization with diplomatic status, etc.

The SEMA Russia Regulations were amended on July 24, 2014 to add two new schedules (“Schedule 2” and “Schedule 3”) with specific, additional prohibitions. With this and subsequent amendments, there are six designated persons listed under Schedule 2 and one designated person listed under Schedule 3. It is prohibited to deal in a loan, bond, or debenture of longer than 30 days’ maturity in relation to a Schedule 2 person or longer than 90 days’ maturity in relation to a Schedule 3 person, and more specifically in relation to:

  • a listed designated person;
  • the property of a listed designated person; or
  • the interests or rights in property of a listed designated person.

These prohibitions do not apply in respect of a loan that was made or a bond or debenture that was issued before the designated person was listed in Schedule 2 or 3.

Additionally, it is prohibited to deal in capital funding through the transaction of shares in exchange for an ownership interest in relation to:

  • a designated person listed under Schedule 2;
  • the property of a designated person listed under Schedule 2, or
  • the interests or rights in property of a designated person listed under Schedule 2.

These prohibitions not apply to capital funding that occurred before the designated person was listed in Schedule 2.

The SEMA Russia Regulations include an obligation to disclose to the Commissioner of the Royal Canadian Mounted Police any property, or information about a transaction in relation to property, that is believed to be the property of a designated person.

There are two sets of sanctions against individuals in Ukraine that have been enacted as part of the Canadian government’s response to the gravity of the situation in Ukraine, and against members of the former Ukrainian government. The Special Economic Measures (Ukraine) Regulations, SOR/2014-60 came into force on March 17, 2014, and were amended several times, most recently on August 6, 2014 (SEMA Ukraine Regulations). The SEMA Ukraine Regulations list 54 designated individuals and 20 designated entities that the Canadian government considers there are reasonable grounds to believe have directly or indirectly been involved with the violation or attempted violation of the sovereignty of Ukraine. The SEMA Ukraine Regulations act to freeze the assets of the listed persons by prohibiting the following actions by any person in Canada, or by any Canadian outside of Canada:

  • dealing in any property, wherever situated, of a designated person;
  • entering into or facilitating, directly or indirectly, any financial transaction related to a dealing with any property of a designated person;
  • providing financial or other services related to a dealing with any property of a designated person;
  • making any goods, wherever situated, available to a designated person; or
  • providing financial or other related services to or for the benefit of a designated person.

The Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2014-44 came into effect on March 5, 2014. These regulations provide for the freezing of funds and economic resources of former President Viktor Yanukovych and 17 other prominent former government ministers, senior officials and businessmen. The regulations act to freeze the assets of the 18 individuals by prohibiting the following actions by any person in Canada, or by any Canadian outside of Canada:

  • dealing, directly or indirectly, in any property, wherever situated, of a politically exposed foreign person;
  • entering into or facilitating, directly or indirectly, any financial transaction related to a dealing with any property of a politically exposed foreign person; or
  • providing financial or other related services in respect of any property of a politically exposed foreign person.

The SEMA Ukraine Regulations and the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations include an obligation to disclose to the Commissioner of the Royal Canadian Mounted Police any property, or information about a transaction in relation to property, that is believed to be the property of a politically exposed foreign person.

The Minister of Foreign Affairs may issue a permit to carry out an activity or transaction that would otherwise be prohibited under the SEMA Ukraine Regulations or the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations.

The Canadian regulations will continue to apply until they are amended or repealed, and additional individuals can be added to the list of politically exposed foreign persons.

United States

On September 12, 2014, the US Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued new directives expanding the scope of existing sectoral sanctions under Executive Order (“E.O.”) 13662 on Russia’s energy, financial services, and defense sectors. The new measures include: (i) modifying Directive 1 to apply to new debt of longer than 30 days maturity (as opposed to 90 days under the previous version of the Directive); (ii) issuing Directive 3 to impose, for the first time, sectoral sanctions on Russia’s defense and related materiel sector prohibiting certain dealings in new debt of greater than 30 days maturity for such entities; (iii) issuing Directive 4 imposing new sanctions on Russia’s energy sector prohibiting US persons from directly, or indirectly, exporting or re-exporting any goods, services, or technology to certain Russian energy companies for deepwater, Arctic offshore, and shale projects that have the potential to produce oil in Russia; (iv) adding certain Russian entities to the Sectoral Sanctions Identification List (“SSI List”) under the various directives including: Sberbank (Directive 1), Gazprom (Directive 4), Gazprom Neft (Directives 2, 4), Lukoil (Directive 4), Rostec (Directive 3), Surgutneftegas (Directive 4), and AK Transneft (Directive 2); (v) adding five Russian defense companies to OFAC's Specially Designated Nationals List (“SDN List”); and (vi) issuing two general licenses allowing for certain derivative transactions under Directives 1-3 and permitting a wind-down period for transactions subject to Directive 4. Existing Directive 2 was left largely unchanged. The Department of Commerce, Bureau of Industry and Security (“BIS”) also announced new Entity List designations and possible additional export restrictions to military end users.

New Treasury Sanctions

The new measures are the latest in a series of sectoral sanctions imposed on specified persons operating in sectors of the Russian economy under E.O. 13662. OFAC has now issued four distinct directives targeting different transactions with designated entities. Entities sanctioned pursuant to the directives are identified onOFAC’s SSI List. Entities can be designated pursuant to more than one directive at a time and US persons must comply with the provisions of all applicable directives. The prohibitions under each directive also extend to any entity that is 50% or more owned by a designated entity (or entities). Only the financial sector sanctions under Directive 1 apply to new equity of the designated entities. New Frequently Asked Questions providing additional guidance regarding these new measures were published on OFAC’s website.

Expanded Financial Sector Sanctions Under Directive 1

OFAC expanded the existing financial sector sanctions under Directive 1 to now prohibit US persons from transacting in, providing financing for, or engaging in other dealings in new debt of longer than 30 days maturity or new equity of persons designated under the Directive, their property, or their interests in property. Previously, only new debt with a maturity of longer than 90 days was prohibited. OFAC also added Sberbank to the existing list of entities subject to this Directive that includes Bank of Moscow, Gazprombank, Russian Agricultural Bank, Vnesheconombank, and VTB Bank. The new restrictions are effective September 12, 2014 and are not retroactive. The prior 90 day new debt maturity restriction, therefore, remains applicable for new debt issued prior to September 12, 2014 for the previously designated entities.

Energy Sector Sanctions Under Directive 2

OFAC did not substantially amend the existing energy sector sanctions under Directive 2. Under Directive 2, US persons are prohibited from engaging in all transactions, providing financing for, and other dealings in debt of longer than 90 days maturity of persons designated under the Directive, their property, or their interests in property. The prior version of Directive 2 prohibited these same activities, but for debt issued on or after July 16, 2014. OFAC also added AK Transneft and Gazprom Neft to the existing list of entities subject to this Directive that includes Rosneft and Novatek.

New Defense Sector Sanctions Under Directive 3

OFAC issued newly created Directive 3 that, for the first time, imposes sectoral sanctions under E.O. 13662 on Russia’s defense and related materiel sector. Directive 3 prohibits US persons from engaging in all transactions in, providing financing for, or engaging in other dealings in new debt of longer than 30 days of persons designated under this Directive, their property, or their interests in property. OFAC designated Rostec under this Directive.

New Sanctions on the Export of Goods, Services or Technology to Individuals and Entities Designated Under Directive 4

OFAC issued newly created Directive 4 that, for the first time, prohibits US persons from directly or indirectly providing, exporting, or re-exporting goods, services (except for financial services), or technology to entities designated under the Directive but only if those goods are intended for use ‘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 maritime area claimed by the Russian Federation and extending from its territory.” Entities designated under Directive 4 presently include Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft. Pursuant to newly-issued General License No. 2, described below, US persons have until September 26, 2014 to wind down applicable transactions with these entities.

The prohibition on the exportation of services includes, for example, drilling services, geophysical services, geological services, logistical services, management services, modeling capabilities, and mapping technologies. The prohibition does not apply to the provision of financial services, e.g., clearing transactions or providing insurance related to such activities. The prohibition also does not apply where the project has the potential to produce gas only.

Directive 4 supplements the existing BIS export restrictions that prohibit the export of certain US-origin items to Russia if intended for use in similar projects.

New SDN Designations

OFAC also designated the following five Russian defense firms to the SDN List: OAO Dolgoprudny Research Production Enterprise, Mytishchinski Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey GSKB, and JSC NIIP. Any assets of these entities, as well as any entity that is 50% or more owned by a designated entity (or entities), that are within US jurisdiction must be frozen and transactions by US persons or within the United States involving these entities are generally prohibited.

General Licenses

In addition to the above sanctions, OFAC has issued General License (“G.L.”) No. 1A, which authorizes certain transactions involving derivative products whose value is linked to an underlying asset that constitutes prohibited new debt and that would otherwise be prohibited pursuant to Directives 1, 2, or 3. G.L. No. 1A replaced and superseded G.L. No. 1, dated July 16, 2014, which authorized certain transactions involving derivative products that would have been prohibited pursuant to Directives 1 or 2.

OFAC also has issued G.L. No. 2, which authorizes activities that would otherwise be prohibited pursuant to Directive 4 that are “ordinarily incident and necessary to the wind-down of operations, contracts, or other agreements” involving designated persons and that were in effect prior to September 12, 2014.

New Commerce Entity List Designations

In conjunction with OFAC's announcement, BIS announced that it will be adding the same five Russian defense firms that were newly added to OFAC's SDN List to the Entity List: Almaz-Antey Air Defense Concern Main System Design Bureau, JSC; Tikhomirov Scientific Research Institute of Instrument Design; Mytishchinski Mashinostroitelny Zavod, OAO; Kalinin Machine Plant, JSC; and Dolgoprudny Research Production Enterprise. Designation on the Entity List imposes a license requirement for the export, reexport or foreign transfer of items subject to the Export Administration Regulations (“EAR”) to the designated entities, with a presumption of denial.

In addition, BIS announced the addition to the Entity List of Gazprom, OAO; Gazpromneft; Lukoil, OAO; Rosneft; and, Surgutneftegas. This designation will impose a license requirement for the export, reexport or foreign transfer of items subject to the EAR to those companies but only where the exporter, reexporter or transferor knows those items will be used directly or indirectly in exploration for, or production from, deepwater, Arctic offshore, or shale projects in Russia. License applications for such transactions will be reviewed with a presumption of denial when for use directly or indirectly for exploration or production from deepwater, Arctic offshore, or shale projects in Russia that have the potential to produce oil.

We expect that the new designations will be formally enacted sometime this week.

BIS also announced that it will require licenses for an additional group of items destined to military end uses or end users in Russia.