Morgan Lewis US and Russia Sanctions Update
US Sectoral Sanctions - OFAC (cont'd)
-
And, per CAATSA section 223 (enacted 2017), the Directive 4 scope was expanded to
cover such projects worldwide, where one or more of these five designated Russian
cos. has/have a (i) ≥33% ownership interest or (ii) majority of the voting interests
but this scope expansion applies only to such outside-Russia projects that are "initiated" after
Jan. 2018 which means (per FAQ 536) the date when the host government (or authorized
agency etc.) "formally grants exploration, development, or production rights to any party"
-
thus, should not apply to outside-Russia projects where the Russian company(ies) obtained
its/their interest at any time after the relevant gov't grant of rights (but there could be
fact/law/interpretation nuances here)
note also that, per related FAQ 537, OFAC's "50% rule" - regarding involvement of SSI
entity(ies) in such project - will apply to determine whether either of the sanction thresholds
(≥33% direct or indirect ownership interests or majority of voting interests) is passed
The further proposed DASKA Act, if ever enacted, would further broaden sanctions
coverage of oil E&P projects both inside and outside Russia (see slides 6 and 69)
Morgan Lewis
20
0View entire presentation