Publication

Latest Developments of US Sanctions Against Russia

January 2025
Region: Americas
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US economic sanctions are administered by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC). On January 10, 2025, OFAC imposed blocking sanctions against a long list of Russian companies active in the Russian energy sector, as well as a long list of vessels.

Following a brief interval, on January 15, 2025, additional blocking sanctions were imposed against several companies involved in schemes to facilitate financial transactions between Russia and third countries, as well as those acting in the interests of the military-industrial complex. The Department of the Treasury characterized these new sanctions as “sweeping” and explained that they are intended to reduce Russian revenues from the energy sector while targeting cross-border payments for sanctioned goods. Among the many newly sanctioned companies are two fairly large Russian oil companies:

  • Public Joint Stock Company Gazprom Neft (Gazprom Neft) – A Russia-based, vertically integrated oil company whose core activities include the exploration, production and sale of oil.
  •  Surgutneftegas – A Russia-based, vertically integrated oil company whose core activities include the exploration, production and sale of oil.

Now that these companies have been designated, their subsidiaries are also subject to OFAC sanctions, even if not included on OFAC’s List of Blocked Persons and Specially Designated Nationals (SDNs). Among the newly listed companies is NIS AD Novi Sad, a Serbia based Gazprom Neft subsidiary.

A careful review of the list of newly sanctioned persons reveals that most are active in the Russian oil sector. The list includes a large number of Russian oilfield service providers, companies that help Russian oil companies, for example, drill or maintain oil wells. The impact on the Russian gas and liquified natural gas (LNG) sector should be limited, although among the newly sanctioned vessels there are four LNG carriers, named Christophe De Margerie, Pskov, Velikiy Novgorod and Vostochny Prospect. All four vessels are associated with Sovcomflot, which was already subject to US blocking sanctions. Two existing LNG export terminals were also sanctioned.

More generally, with respect to Sovcomflot, OFAC revoked General License 113, which had exempted Sovcomflot vessels not included on the OFAC SDN List from US blocking sanctions. As a result, all Sovcomflot vessels are now subject to US blocking sanctions, even if not included on the OFAC SDN List.

More than 180 vessels were subjected to US blocking sanctions on January 10. Most are oil or refined products tankers. The Department of the Treasury press release characterizes many of these vessels as part of Russia’s “shadow” fleet. Companies, including ports, insurers and charterers, that deal with or accept cargoes transported by these newly sanctioned vessels face a risk that US secondary sanctions might be imposed against them. As a result, they are obligated to exercise enhanced due diligence to ensure compliance.

Early reports indicate that these new US sanctions are having an impact. Several of the newly sanctioned tankers are floating offshore China instead of proceeding to their destination ports. One article reports that Indian buyers of Russian crude are consulting among themselves in an effort to understand and assess the corresponding US sanctions risks.

Also on January 10, OFAC issued a new “Determination” that prohibits US persons from exporting or providing “petroleum services” to Russia. Several US oilfield service companies withdrew from Russia following Russia’s full-scale invasion of Ukraine in February 2022, but Schlumberger did not (although it is not entirely clear if Schlumberger can accurately be characterized as a US company). Recent press reports indicate that some members of Congress and sanctions specialists are grumbling that, if Schlumberger does not withdraw from Russia, it could be penalized for violating the new directive’s prohibition on exporting “petroleum services” from the US to Russia.

US sanctions authorities are not shy about touting the significance of the new sanctions they impose. In this case, the sanctions imposed on January 10, in the last days of the Biden administration, appear to have the potential to impose real costs on Russia – and real risks to purchasers of Russian crude.

The January 15 designations, among others, target companies that continue to supply Common High Priority Items to support Russian military advancements. The new sanctions include multiple companies that were previously designated only under Executive Order 14024 and are now additionally sanctioned under the separate Executive Order 13662.

These additional designations are driven by two primary objectives: (i) to increase the risk of secondary sanctions for individuals or entities that continue to interact with these companies, and (ii) to complicate the potential steps of a future administration to ease sanctions against Russia.

Designations under Executive Order 14024 can be lifted solely at the discretion of the president. However, removing designations under Executive Order 13662 requires congressional notification and an opportunity to disapprove for each exclusion – a process that would require significant time, political negotiation and overcoming potential opposition in the Senate or the House of Representatives.