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December 08, 2011 

OFAC Makes Significant Changes to Remaining U.S. Sanctions on South Sudan

Today OFAC issued a final rule (PDF) that made significant changes to the Sudanese Sanctions Regulations as they relate to transactions with the newly independent country of the Republic of South Sudan (“South Sudan”), including South Sudan’s oil and gas sector.

The changes made in the final rule are effective immediately. 

While OFAC lifted most sanctions on South Sudan after the country became independent in July of this year, OFAC still prohibited transactions that involved Northern Sudan’s oil and gas sector and the transshipment of items to or from South Sudan via North Sudan (since South Sudan is land-locked, South Sudan relies on Port Sudan, which is located in the North).

The change issued today with the broadest impact is a new general license contained in new section 538.536 of the Sudanese Sanctions Regulations that authorizes "all activities and transactions relating to the petroleum and petrochemical industries in" South Sudan that would otherwise be prohibited under the Sudan sanctions because they involve Sudan or Sudanese persons. As a result of this general license, the following activities are now authorized:

• The sale and export of equipment to South Sudan for use in South Sudan’s oil and gas sector;
• the transshipment of goods, technology and services to or from South Sudan through North Sudan;
• a broad range of activities in South Sudan’s oil and gas exploration and production sector, including exploration, development, production and oilfield services;
• downstream activities such as ... sale, and transport of petroleum from South Sudan; and
• financial transactions ordinarily incident to any such activities.

OFAC also issued a general license (section 538.537) that authorizes the “transit or transshipment" of any "goods, technology, and services through Sudan to or from" South Sudan, along with related financial transactions, regardless of whether these transactions involve South Sudan’s petroleum sector.

While the exportation of equipment and other items subject to U.S. jurisdiction may be exported to South Sudan, such items remain subject to the jurisdiction of the dual-use export controls administered by BIS.

All activities and transactions relating to the petroleum and petrochemical industries in Northern Sudan continue to be prohibited, unless otherwise authorized by a specific license.

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