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US bans imports of Russian oil, liquefied natural gas and coal
Additional restrictions imposed on new investments in the energy sector in Russia
Author:
United States | Publication | March 2022
On March 8, 2022, US President Joseph Biden issued a new Executive Order (EO) prohibiting imports of Russian oil, liquefied natural gas, coal, and related products into the United States and prohibiting US persons from engaging in any new investment in the energy sector of the Russian Federation.
More specifically, the new EO prohibits:
- the importation into the United States of the following products of Russian Federation origin:1 crude oil; petroleum; petroleum fuels, oils and products of their distillation; liquefied natural gas; coal and coal products;
- new investment2 in the energy sector in the Russian Federation3 by a United States person, wherever located; and
- any approval, financing, facilitation or guarantee by a United States person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by this section if performed by a United States person or within the United States.
This new EO builds on other economic sanctions imposed by the US in recent weeks in response to Russia’s invasion of Ukraine, which we previously summarized here.
These new sanctions take effect immediately but, OFAC issued a new contemporaneous general license (No. 16) which authorizes all transactions that are ordinarily incident and necessary to the importation of energy products covered by the new sanctions into the United States through 12:01 a.m. EDT April 22, 2022, so long as they are pursuant to a written agreement entered into before March 8, 2022.
On the same day (March 8, 2022), the United Kingdom announced that it would phase out imports of Russian oil by the end of the year. However, the phasing would not be immediate, and we understand that it is not currently proposed that this will be achieved through specific UK sanctions. Rather, the phasing out of imports will be achieved through industry engagement and over a period of time to allow for supply chain adjustment and addressing industry and consumer concerns.
Companies should continue to monitor the rapidly evolving Russia-related sanctions landscape so that they are well-positioned to respond to any additional sanctions. The Biden administration has made it abundantly clear that the US intends to impose additional measures should the situation continue to escalate.
As always, we will continue to monitor these developments and issue additional briefings as warranted.
Special thanks to law clerks Claire Huitt (Washington, DC) and Mikkaela Salamatin (New York) for helping prepare the briefing.
Footnotes
1
Although the formal definition is not yet published, OFAC guidance (FAQ 1019) suggests it will include “goods produced, manufactured, extracted, or processed in the Russian Federation, excluding any Russian Federation origin good that has been incorporated or substantially transformed into a foreign-made product.”
2
Although the formal definition is not yet published, OFAC guidance (FAQ 1019) suggests it will include “any transfer or extension of funds or credit on the basis of an obligation to repay, or any assumption or guarantee of the obligation of another to repay an extension of funds or credit, including overdrafts, currency swaps, purchases of debt securities, purchases of a loan made by another person, sales of financial assets subject to an agreement to repurchase, renewals or refinancings whereby funds or credits are transferred or extended to a borrower or recipient described in the provision, the issuance of standby letters of credit and drawdowns on existing lines of credit.”
3
Although the formal definition is not yet published, OFAC guidance (FAQ 1019) suggests it will include “procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, or transport of petroleum, natural gas, liquefied natural gas, natural gas liquids, or petroleum products or other products capable of producing energy, such as coal or wood or agricultural products used to manufacture biofuels, the development, production, generation, transmission or exchange of power, through any means, including nuclear, electrical, thermal and renewable.”
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