OFAC "Intensifies" US Sanctions against Russia's Energy Sector

On 10 January 2025, the U.S. Department of the Treasury, together with the UK government, sharply escalated sanctions against Russia’s energy sector, in what the US government described as a “sweeping action”. Any present or future business with almost any facet of Russia’s energy sector now carries considerable risks for both US and non-US persons.

The policy objective behind the escalation is to degrade Russia’s ability to finance its war against Ukraine. In doing so, the new sanctions are unsparing in targeting the “shadow fleet” that transports Russian oil; the traders and trading firms engaged in that trade; and major Russian oil producers Gazprom Neft and Surgutneftegas.

OFAC has sanctioned an additional 183 vessels engaged in the transport of Russian (and, on occasion, Iranian) oil, not all of which, based on their designations, would appear on face value to be part of Russia’s shadow fleet. Two Russian maritime insurance providers, Ingosstrakh Insurance Company and Alfastrakhovanie Group, have also been sanctioned. The same applies to Russian oilfield service providers, energy officials and “elites”; more than two dozen Gazprom and Surgutneftgas subsidiaries;  and, significantly for shipping, Sovcomflot (subject to fresh sanctions), as well as Gazpromneft and Rosneft. OFAC has also exposed by name a network of UAE-based traders as “opaque traders of Russian oil”.   

All property interests of the sanctioned entities, vessels and individuals located in the US or in the possession/control of US persons are now blocked and must be reported to OFAC. Non-US persons are prohibited from causing or conspiring to cause US persons (i.e. US banks) to violate the sanctions or to engage in evasive conduct. Foreign financial institutions that transact in violation of the sanctions run the risk of also being sanctioned, with potentially severe repercussions regarding access to the US financial system (i.e. the ability to transact in US dollars). The global shipping community is now officially on notice that business with Russia’s energy sector carries significant risks.

The above is for general, informational purposes only and does not constitute legal advice. Members requiring further information should reach out to their usual contact at the Club. Specific legal advice should be sought by Members to clarify how the sanctions may impact their business.

And Introduces Additional Sanctions Relief for Syria

On 6 January 2025, OFAC issued a general licence to expand authorisations for transactions involving Syria, one of OFAC’s most heavily-sanctioned jurisdictions. Now, following the fall of the Assad regime, OFAC is licensing some previously prohibited transactions to assist the Syrian people.

Under the new licence, i.e. Syria General License 24, for the next six months (until 7 July 2025), the following transactions relevant to shipping are authorised:

1. Transactions with governing institutions in Syria undertaken after 8 December 2025; and
2. Transactions in support of the sale, supply, storage or donation of energy, including petroleum, petroleum products, natural gas and electricity to or within Syria.

The importation of Syrian petroleum and/or petroleum products into the US remains prohibited, as do transactions involving Russian and Iranian interests in Syria and certain already-blocked persons.

With respect to shipping, the authorisation of energy transactions likely includes the provision of ocean shipping services pursuant to the sale, supply or donation of petroleum, petroleum products or natural gas to Syria. However, caution is still warranted. Any potential transaction involving Syria should thus be closely scrutinised to ensure compliance with all laws and regulations.

The above is for general, informational purposes only and does not constitute legal advice. Members requiring further information should reach out to their usual contact at the Club. Specific legal advice should be sought by Members to clarify how the sanctions may impact their business.