New EU sanctions target Russian energy investments and supplies, imports of Russian steel, exports of luxury goods, and dealings with Russian SOEs

Authored by our Global Sanctions, Export Controls and Customs Teams

On 15 March 2022, the EU expanded its asset freeze list, adding fifteen individuals and nine entities. It prohibits investments into the Russian energy sector, while carving out activities necessary for essential supplies to the EU. It imposes a broad prohibition on dealings with 12 Russian State Owned Enterprises ("SOEs") and related affiliates. New trade sanctions target imports from Russia of steel products and exports to Russia of luxury goods. 

New EU asset freezes 

On 15 March 2022, the EU added the following 15 businesspersons and 9 entities to the EU Asset Freeze List.¹ Listed individuals include Roman Abramovich, German Khan, Viktor Rashnikov, Alexey Kuzmichev, Marina Sechina, Suleyman Kerimov, and Vladimir Rashevsky. 

New entities listed are Rosneft Aero, JSC Rosoboronexport, JSC NPO High Precision Systems, JSC Kurganmashzavod, JSC Russian Helicopters, PJSC United Aircraft Corporation, JSC United Shipbuilding Corporation, JSC Research and Production Corporation Uralvagonzavod and JSC Zelenodolsk Shipyard.

As a result, it is prohibited to deal with any funds and economic resources belonging to, owned, held or controlled by listed persons, or to make available any funds or economic resources, directly or indirectly, to them or for their benefit. This requires a careful assessment of any entities owned or controlled by listed persons.

Enhanced energy-sector sanctions 

Ban on supplies of energy-related goods and technology and related services

Supplies to Russia of certain energy-related goods (listed in Annex II to Regulation (EU) 833/2014), as well as related technical assistance, brokering, financing and financial assistance, have since 2014 been subject to prior authorisation, and were generally permissible unless intended for Russian deep water, Arctic or shale oil exploration and production.

As from 16 March, the direct or indirect sale, supply, transfer or export of Annex II goods is prohibited. So too are related technical assistance, brokering, financing and financial assistance, as well as "other services".²

Exceptions apply for: 

• supplies of Annex II goods, and related "technical or financial assistance" (but significantly not brokering or other services), necessary for the transport of fossil fuels from or through Russia into the EU, or the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment; 
• the execution until 17 September 2022 of obligations arising from pre-16 March 2022 contracts, or ancillary contracts necessary for the execution of such contracts; 
• the provision of insurance or reinsurance to EU entities with regard to its activities outside the energy sector in Russia; 

Further, there is a possibility for competent authorities to authorise supplies of Annex II goods, and related "technical or financial assistance" (but significantly not brokering or other services), where the activities:

• are necessary for ensuring critical energy supply within the Union; or
• are intended for the exclusive use of entities owned, or solely or jointly controlled by EU entities.

Investment ban in the energy sector, subject to exceptions

A broad ban on investments in the Russian energy sector prohibits³: 

• Acquiring or extending participation in entities incorporated in Russia or other non-EU countries operating in the energy sector in Russia;
• Granting or being part of any arrangement to grant new loan or credit, or otherwise provide financing, including equity capital, to entities incorporated in Russia or other non-EU countries operating in the energy sector in Russia, or for the documented purpose of financing such entities; 
• Creating any new joint venture any entity incorporated in Russia or other non-EU countries operating in the energy sector in Russia; or
• Providing investment services directly related to the above activities. 

There is possibility for competent authorities to authorise such activities where they: 

• are necessary for ensuring critical energy supply within the Union, as well as the transport of fossil fuels, in particular coal, oil and natural gas, from or through Russia into the Union; or
• exclusively concerns an entity operating in the energy sector in Russia owned by an EU entity. 

Broad ban on direct and indirect dealings with certain Russia SOEs

It is now prohibited to engage, directly or indirectly, in any "transaction with" 12 SOEs listed in Annex XIX, as well as non-EU entities owned for more than 50% by them or any other entity acting on their behalf or at their direction.⁴ The 12 listed SOEs are:

• OPK OBORONPROM
• UNITED AIRCRAFT CORPORATION
• URALVAGONZAVOD
• ROSNEFT
• TRANSNEFT
• GAZPROM NEFT
• ALMAZ-ANTEY
• KAMAZ
• ROSTEC (RUSSIAN TECHNOLOGIES STATE CORPORATION)
• JSC PO SEVMASH
• SOVCOMFLOT
• UNITED SHIPBUILDING CORPORATION

There are exemptions for:

• the execution until 15 May 2022 of contracts concluded before 16 March 2022 or ancillary contracts necessary for the execution of such contracts;
• transactions that are strictly necessary for the purchase, import or transport of fossil fuels, titanium, aluminium, copper, nickel, palladium and iron ore from or through Russia into the Union;
• transactions related to energy projects outside Russia in which the Annex XIX SOE is a minority shareholder.

Ban on imports to the EU of iron and steel products 

The EU imposed an import ban on certain iron and steel products, originating in Russia or exported from Russia, as listed in Annex XVII.⁵ It is also prohibited to purchase, directly or indirectly, such products which are located or which originated in Russia; to transport such products if they originated in Russia or are being exported from Russia to any other country; or to provide, directly or indirectly, technical assistance, brokering services, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the above activities. An exception applies for the execution until 17 June 2022 of contracts concluded before 16 March 2022 or ancillary contracts.

We note that steel products included in Annex XVII were subject to the EU Safeguard measure. As a result, on 16 March 2022, the EU announced⁶ an adjustment of allocation of quotas, redistributing volumes previously available for steel imports originating in Russia and Belarus among other exporting countries. This adjustment does not preclude changes that might result from the ongoing review of the measures, initiated in December 2021. 

Luxury goods export ban 

The banned the direct or indirect sale, supply, transfer or export of certain luxury goods to persons in Russia or for use in Russia.⁷ These luxury goods are listed in Annex XVIII, and are subject to certain value thresholds. 

An exception applies for goods that are necessary for the official purposes of diplomatic or consular missions of Member States or partner countries in Russia or of international organisations enjoying immunities in accordance with international law, or to the personal effects of their staff.

EU credit rating bans

As of 15 April 2022 it is prohibited to provide credit rating services, or subscription services in relation to credit rating activities, to any Russian national or natural person residing in Russia, or entity established in Russia.⁸ An exception applies for nationals of a Member State or natural persons having a temporary or permanent residence permit in a Member State.

_{1 See Council Implementing Regulation (EU) 2022/427 of 15 March 2022.
2 New Article 3 of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.
3 Article 3a of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.
4 Article 5aa of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.
5 Article 3g of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.
6 See Council Regulation (EU) 2022/434 of 16 March 2022.
7 Article 3h of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.
8 Article 5j of Regulation (EU) 833/2014, added by Council Regulation (EU) 2022/428 of 15 March 2022.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2022 White & Case LLP}