With only a few calendar days left in the current presidential administration, on January 10, 2025, the US government issued the latest round of sanctions targeting Russia’s revenue sources used to fund its war in Ukraine. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), concurrently with the U.S. Department of State, issued new, specially designated national (SDN) designations against more than 200 persons (individuals, entities, and vessels). The sanctions package, described as “sweeping” by the State Department, focuses on Russia’s energy sector, including oil production and exports.
New SDN Designations. OFAC and the State Department issued lengthy lists of persons designated in the first instance as part of this U.S. government move against Russia’s oil sector, including designation of more than 200 entities, some two dozen individuals, and over 180 vessels (i.e., ships or oil tankers). OFAC also revised the designation status of over a dozen persons in a move intended to enhance or double the applicable designation authority. The U.S. government targeted persons across the oil sector, including major oil producers (Gazprom Neft and Surgutneftegas), executives of companies in the oil industry, energy officials, and numerous ships in Russia’s so-called shadow fleet that facilitates the movement of illicit oil cargo. Many of the designations were dually issued under both the Russia Sanctions Program and the Ukraine Program.
Along with the designations, OFAC issued or reissued eight General Licenses to facilitate the actions of U.S. persons in winding down relations with affected Russian persons, or to designate carve-outs in the anti-Russian oil apparatus for permissible civil nuclear or diplomatic activities, among other permissions. Notably, with General License 118 OFAC cleared the way for U.S. persons to divest from debt and equity in Gazprom Neft, Surgutneftegas, and certain others. However, this permission is only temporary; as written, it expires on February 27, 2025.
The U.S. government moves were taken in concert with the United Kingdom government, which also sanctioned the two major oil producers.
New Determinations Under the Russia Sanctions Program. In addition to adding persons to the SDN list, OFAC rolled out two new determinations, giving additional teeth to the Russia Sanctions Program. The Determination Pursuant to Section 1(a)(i) of Executive Order 14024, “Energy Sector of the Russian Federation Economy” (or January 2025 Energy Sector Determination), creates a new SDN designation authority for persons determined to operate or have operated in the energy sector of the Russian economy. It expands upon previously existing energy sector measures under EO 13662 of the Ukraine Program and EO 14024.
A second newly issued measure, the Determination Pursuant to Section 1(a)(ii) of Executive Order 14071, “Prohibition on Petroleum Services,” creates a prohibition for U.S. persons to engage in the petroleum sector in Russia and will take effect on February 27, 2025.
As part of the sizable sanctions issuance, OFAC also published 19 updates to its frequently asked questions (FAQs) to provide further guidance on how U.S. persons can abide by the complex sanctions regime.
New Measures Against Sanctions Evasion. On Wednesday, January 15, 2025, the Biden administration released an additional tranche of sanctions, this time focused on curbing Russian efforts to evade sanctions and therefore targeting the financial services sector. OFAC re-designated almost 100 entities already subject to EO 14024 under the additional authority of EO 13662. The new sanctions target an evasion scheme established between persons in Russia and China to facilitate cross-border payments for sensitive goods. Concurrently, the State Department designated over 150 persons under EO 14024 for supporting Russia’s defense industry.
Venable’s International Trade and Logistics Group is experienced in advising clients on the Russia and Ukraine Sanctions Programs. Please reach out to the authors with inquires regarding how the latest Russia sanctions may impact your business activities.