U.S. Expands Oil Equipment Export Controls on Russia
Yesterday, the Commerce Department’s Bureau of Industry and Security (BIS) issued a final rule restricting the export of critical oil refining equipment to Russia and tightening license requirements for exports to the Russian oil and gas industry.
The final rule makes two key changes to current sanctions on the Russian energy sector. First, the rule prohibits the export of oil refining equipment specified in a new Supplement No. 4 to Russia regardless of the intended end use of the equipment. In other words, the restrictions apply even if exporters do not have “knowledge” that the items will be used in frontier oil and gas applications.
Second, the final rule imposes a heightened license review policy on both the existing and newly-implemented prohibitions. Subject to exceptions, BIS’s policy for reviewing license applications related to these rules is now raised from a “presumption of denial” to a “policy of denial.”
Taken together, the amended rules effectively prohibit the “knowing” export of all items specified under certain Export Control Classification Numbers (ECCNs) for direct or indirect use in frontier oil and gas applications in Russia, and effectively prohibit all exports of equipment specified in the new Supplement No. 4 to Russia, regardless of stated end use.
Exporters of oil and gas equipment, including the fluid handling industry, should carefully review these updates.