With the issuance of a new Final Rule Effective and under US Regulatory implementation as of March 3, 2022. (to be formally published in the Federal Register on March 8, 2022) The Bureau of Industry and Security (BIS) has, in the wake of Russia’s February 2022 invasion of the Ukraine, imposed additional export controls on the Russian oil and gas industry. The new export controls effectively expand sanctions imposed on the industry in 2014 following Russia’s invasion and occupation of Crimea. The export controls imposed under this new rule target Russia’s oil and gas refinery industry. Under this new final rule, BIS has added Supplement 4 to Part 746 which enumerates a wide range of parts/components/equipment (by description and Harmonized Tariff Code/Schedule B number) that are now subject to a licensing requirement when exported, re-exported or transferred (in-country) to/within Russia. Unlike the prior sanctions under Part 746.5 of the EAR, the newly revised § 746.5 which covers the Russian oil and gas industry sanctions, changes the licensing policy from a “presumption” of denial to a more restrictive “policy” of denial in essence banning such transaction with few exceptions. Most importantly unlike the old (prior to March 3rd) 746.5 export controls which were focused on restricting a select list of items subject to the EAR when exported for end use related to deep-water (greater than 500 feet), Arctic offshore or shale projects, the newly expanded 746.5 controls include all of the “old” sanctions but also impose a licensing requirement on a longer list of items (see Supplement 4 to Part 746.5) that are associated with oil and gas refining which now require a license (subject to a policy of denial) when exported, re-exported or transferred to/within Russia for any end use purpose. Contact TSI Global Consulting for a complete analysis of this new regulation and how it may apply to specific transactions that your company is considering. Given the current geopolitical situation surrounding the Russian invasion of Ukraine and the fluidity of new export controls and sanctions being imposed daily, a complete and thorough up-to-the-minute analysis of regulatory export compliance issues/restrictions and deep screening of parties to transactions must be undertaken when considering any Russian or Belorussian related business at this time.
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