U.S. uses expanded version of sanctions on Yuzhno-Kirinskoye Field
The U.S. expanded its sanctions against Russia today, announcing that it would be adding the Yuzhno-Kirinskoye Field in the Sea of Okhotsk, to the Entity List maintatined in the Export Administration Regulations, 15 C.F.R. Parts 730-774 (EAR). As a result of the decision, the exportation, reexportation, or in-country transfer to this field of any item subject to the EAR requires a license from the Bureau of Industry and Security (BIS), according to law firm Baker & McKenzie.
BIS explained that this designation reflects the fact that the Yuzhno-Kirinskoye Field contains substantial reserves of oil. Because of these reserves, BIS found that exports, reexports, or in-country transfers of items subject to the EAR to this field present “an unacceptable risk” of being used in or diverted to the exploration for or production of oil or gas in Russian deepwater (greater than 500 feet) projects. This is the first instance of BIS relying on diversion as a basis for designating a Russian energy company on the Entity List, explains Baker & McKenzie.
This represents a broader form of sanctions than has been placed on the Russian oil and gas industry previously. In the past, exports, reexports, or in-country transfers to some Russian companies designated on the Entity List have been made subject to licensing requirements only where the exporter knows that the items will be used for specifically sanctioned activities, or if the exporter is unable to determine what the end use of the items will be. The sanctions against the Yuzhno-Kirinskoye Field will require that all items subject to the EAR have a BIS license, regardless of their end use.
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