The Council of the European Union has introduced amendments to its sanctions contained in Regulation 833/2014, which target "Russia's actions destabilising the situation in Ukraine".

The amendments, contained in Regulation 1290/2014, have been made in order to clarify points which were previously insufficiently clear and had caused confusion, in particular in the oil and gas and financial sectors, as to the activities that are no longer permitted following the introduction of the sanctions in August 2014.

The changes relating to the oil sector are made by the amendment of Articles 3 and 3a of Regulation 833/2014, and have clarified that:

  • The restrictions on sale, supply, transfer or export of items listed in Annex II to Regulation 833/2014 apply to Russia, including its Exclusive Economic Zone and Continental Shelf. There had previously been doubt as to the maritime area covered by the regulation.
  • The listing of an item in Annex II is required for a restriction to apply in relation to it. Annex II comprises items suited to: oil exploration and production in waters deeper than 150 metres; oil exploration and production in the offshore area north of the Arctic Circle; and projects that have the potential to produce oil from resources located in shale formations by way of hydraulic fracturing. There had previously been doubt as to whether it was a listing in Annex II, or the relevance of undefined "deep water", "Arctic" or "shale oil" categories of exploration and production activity which were determinative of a restriction.
  • Authorisation pursuant to the "grandfathering" provision in Article 3(5) may be available not only in relation to a contract concerning restricted items which was concluded before 1 August 2014, but also in relation to ancillary contracts necessary for the performance of such a contract.
  • The restrictions concerning shale formations do not apply to exploration and production through shale formations to locate or extract oil from non-shale reservoirs.

The changes concerning the financial sector are made by the amendment of Article 5, and have clarified the following points:

  • The derogation in Article 5(3)(a) to the prohibition in Article 5(3) on directly or indirectly making or being part of any arrangement to make new loans or credit with maturity exceeding 30 days to any person listed in Annex III, V or VI applies as between the EU and any third State.  It was previously stated to apply only as between the EU and Russia. Under this derogation, loans or credit may be extended to persons listed in Annex III, V or VI provided such loans or credit have a specific and documented objective to provide financing for non-prohibited imports or exports of goods and non-financial services between the EU and any third State.
  • It has now been confirmed that the prohibition in Article 5(3) does not apply to drawdown or disbursements made under a contract concluded prior to 12 September 2014, provided that all terms and conditions of such drawdown or disbursement were agreed prior to 12 September 2014, and have not been modified since that date; further, a contractual maturity date must have been fixed for the repayment in full of all funds made available and for the cancellation of all commitments, rights and obligations under the contract. Though it was previously clear that the conclusion of new facility agreements with maturity longer than 30 days in favour of persons listed in Annex III, V, or VI has been prohibited since 12 September 2014, there had been confusion as to whether the drawdown of loans under facility agreements pre-dating the introduction of the restriction was permitted.