International Trade Law News

Published by Jacobson Burton Kelley PLLC

By Doug Jacobson and Michael Burton, Jacobson Burton PLLC

As part of the next phase of U.S. sanctions on Russia, today the U.S. Department of Commerce's Bureau of Industry and Security (BIS) expanded the controls on export and reexports to companies in Russia by adding ten companies in the Russian oil and gas and defense sectors to the BIS Entity List.

BIS's actions are in addition to the the new sanctions on Russia's financial services, energy and defense sectors announced today by the Treasury Department that will be implemented by OFAC.

Today's move by BIS dramatically expands the previously imposed restrictions on the export or reexport of U.S. origin good, software and technology intended for Russia's energy sector, since any product or software that is "subject to the Export Administration Regulations" (EAR) will require a BIS license (with a presumption of denial) if:

1. it will be used by the five energy companies listed below; and 
2. in the exploration of, or production from, deepwater, Arctic offshore, or shale projects in Russia.

These restrictions are much broader than the sanctions imposed by the EU and other countries to date.

Here is a summary of the parties added to the BIS Entity List today:

Russian Energy Sector

• Gazprom, OAO major business lines are geological exploration, production, transportation, storage, processing and sales of gas, gas condensate and oil, sales of gas as a vehicle fuel as well as generation and marketing of heat and electric power.
• Gazpromneft  is a Russian oil company engaged primarily in oil & gas exploration and production, the sale and distribution of crude oil, and the production and sale of petroleum products.
• Lukoil, OAO is a leader of Russia’s petroleum industry.
• Rosneft a leader of Russia’s petroleum industry. Rosneft activities include hydrocarbon exploration and production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.
• Surgutneftegas is a Russian oil and gas company that was created in 1993 by merging several previously state-owned companies owning large oil and gas reserves in Western Siberia.

• Almaz-Antey Air Defense Concern Main System Design Bureau, JSC is one of the world’s largest defense industry complexes, specializing in development of anti-air, anti-missile and space defense systems.
• Tikhomirov Scientific Research Institute of Instrument Design specializes in the development of weaponry control systems for fighter planes and mobile medium range anti-aircraft surface to air missile (SAM) defense vehicles.
• Mytishchinski Mashinostroitelny Zavod, OAO manufactures and supplies ordnance and accessories, including naval, aircraft, anti-aircraft and field artillery products.
• Kalinin Machine Plant, JSC designs and manufactures machines for military and civil applications.
• Dolgoprudny Research Production Enterprise develops and manufactures high-technology defense products.