New U.S. and UK Sanctions, Including Related to Russia’s Energy Sector

On January 10, 2025, the U.S. Department of the Treasury and U.S. Department of State intensified sanctions against Russia with new measures targeting Russia’s energy sector. According to the Treasury Department’s press release, these measures are intended “to fulfill the G7 commitment to reduce Russian revenues from energy” and “substantially increase the sanctions risks associated with the Russian oil trade.”

The new U.S. sanctions include a determination by the U.S. Department of the Treasury authorizing the imposition of property-blocking sanctions against any person who is determined by the Treasury Secretary or Secretary of State (in consultation with one another) to operate or have operated in the Russian energy sector, and a determination issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) prohibiting—effective February 27, 2025—the provision of “petroleum services” from the United States or by a U.S. person to any person located in Russia. In addition, OFAC and the U.S. Department of State collectively designated for property-blocking sanctions more than 400 individuals, entities, and vessels from various countries involved in Russia’s energy sector, including two of Russia’s most significant oil producers and exporters—Public Joint Stock Company Gazprom Neft (“Gazprom Neft”) and Surgutneftegas, along with more than two dozen of their subsidiaries. The designations included more than 180 vessels, many of which are part of Russia’s “shadow fleet” of vessels involved in the trade of Russian oil, as well as several Russian energy executives, oil traders, oilfield service providers, and financial and insurance entities associated with Russia’s energy sector. The designations also covered two active Russian liquefied natural gas (“LNG”) projects and a Russian oil project.

On January 15, 2025, the U.S. Department of the Treasury and U.S. Department of State designated or re-designated under additional sanctions authority nearly 250 individuals and entities for property-blocking sanctions, including actors based in China.

OFAC also issued multiple general licenses related to the above designations, including a general license authorizing until February 27, 2025, transactions ordinarily incident and necessary to the wind down of transactions involving Gazprom Neft and Surgutneftegas, their designated subsidiaries, and entities that they own 50 percent or more, directly or indirectly, individually or in the aggregate, subject to certain conditions. In addition, OFAC revoked a general license that had authorized transactions with certain vessels subject to U.S. property-blocking sanctions due to their ownership, and amended two existing general licenses. One of these amended general licenses, General License 8L (which supersedes General License 8K), significantly narrows the scope of permissible energy transactions involving certain blocked financial institutions to include only wind-down transactions until March 12, 2025.

Also on January 10, 2025, the UK announced that it has joined the United States in imposing sanctions on Gazprom Neft and Surgutneftegas by designating them for asset-freezing sanctions. As part of this action, the UK issued two general licenses, allowing limited transactions with these entities for a temporary period.

Finally, on January 13, 2025, OFAC and the UK’s Office of Financial Sanctions Implementation (“OFSI”) published a non-binding Memorandum of Understanding (“MoU”) that is intended to strengthen cooperation between OFAC and OFSI in administering and enforcing economic sanctions.

Russian Energy Sector Covered by Executive Order 14024

Section 1(a)(i) of Executive Order (“E.O.”) 14024 provides for the imposition of property-blocking sanctions on any person determined to operate or have operated in certain sectors of the Russian Federation economy. On January 10, the Secretary of the Treasury, in consultation with the Secretary of State, issued a new determination that the Russian energy sector is covered by Section 1(a)(i) of E.O. 14024. While persons in the Russian energy sector are not automatically subject to U.S. property-blocking sanctions, this determination authorizes the imposition of property-blocking sanctions on any person who is determined by the Secretary of the Treasury or the Secretary of State, in consultation with one another, to operate or have operated in the Russian energy sector. According to OFAC’s press release, this determination “strengthens the ability of Treasury and State to target revenue—in particular, revenue generated from the export of oil—that Russia uses to fuel its brutal war against Ukraine and other harmful foreign activities.” The Russian energy sector had already been the subject of a similar determination in 2014 pursuant to Section 1(a)(i) of E.O. 13662, which was issued in March 2014 following Russia’s annexation of Crimea.

OFAC has explained in Frequently Asked Question (“FAQ”) guidance that it anticipates publishing regulations defining the term “energy sector of the Russian Federation economy” broadly to include activities such as “the procurement, exploration, extraction, drilling, mining, harvesting, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, manufacturing, testing, financing, distribution, purchase or transport to, from, or involving the Russian Federation, of petroleum, including crude oil, lease condensates, unfinished oils, natural gas, liquefied natural gas, natural gas liquids, or petroleum products, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels; the development, production, testing, generation, transmission, financing, or exchange of power, through any means, including nuclear, electrical, thermal, and renewable, to, from, or involving the Russian Federation; and any related activities, including the provision or receipt of goods, services, or technology to, from, or involving the energy sector of the Russian Federation economy.” See FAQ 1213.

This determination pertaining to the Russian energy sector follows similar determinations with respect to the technology, defense and related materiel, financial services, aerospace, electronics, marine, accounting, trust and corporate formation services, management consulting, quantum computing, metals and mining, architecture, engineering, construction, manufacturing, and transportation sectors of the Russian economy. OFAC has relied on these determinations to impose sanctions against numerous entities and individuals both within and outside of Russia who have operated or are operating within these sectors of the Russian economy.

Prohibition on Petroleum Services

Also on January 10, OFAC issued a determination pursuant to Section 1(a)(ii) of E.O. 14071 (the “Petroleum Services Determination”) that prohibits the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person wherever located, of “petroleum services” to any person located in the Russian Federation, unless licensed or otherwise authorized by OFAC. The Petroleum Services Determination is effective beginning at 12:01 a.m. eastern standard time on February 27, 2025. In this context, “U.S. persons” include U.S. legal entities and their non-U.S. branches; U.S. citizens and lawful permanent residents, no matter where located or employed; and persons present in the United States. According to OFAC’s press release, the determination is intended to “cut[] off Russia’s access to U.S. services related to the extraction and production of crude oil and other petroleum products,” though the prohibition extends well beyond services related to extraction and production.

Specifically, OFAC explained in FAQ guidance that it expects to issue regulations defining “petroleum services” as including “services related to the exploration, drilling, well completion, production, refining, processing, storage, maintenance, transportation, purchase, acquisition, testing, inspection, transfer, sale, trade, distribution, or marketing of petroleum, including crude oil and petroleum products, as well as any activities that contribute to Russia’s ability to develop its domestic petroleum resources, or the maintenance or expansion of Russia’s domestic production and refining.” Petroleum services also include services related to natural gas as a byproduct of oil production in Russia. See FAQ 1216.

Notably, the Petroleum Services Determination does not prohibit the following:

• Services related to isotopes derived from petroleum manufacturing that are used for medical, agricultural, or environmental purposes, such as Carbon-13.
• Covered Services, as defined in the price cap policy, related to the maritime transport of Russian-origin crude oil and petroleum products (i.e., trading/commodities brokering; financing; shipping; insurance, including reinsurance and protection and indemnity; flagging; and customs brokering) provided that such crude oil or petroleum products are purchased at or below the relevant price caps established by the international coalition including the G7, the European Union (“EU”), and Australia, and further provided that the services do not involve an entity blocked pursuant to E.O. 14024 and are not otherwise prohibited by OFAC sanctions (see FAQ 1217). (Additional information about the Russian-origin crude oil and petroleum products price caps is provided in our client alerts from December 2, 2022, January 4, 2023, and January 2, 2024.)
• Services in connection with the wind down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.

Of note, OFAC also issued General License 121 authorizing all transactions prohibited by the Petroleum Services Determination that are related to three large oil and gas projects: Caspian Pipeline Consortium, Tengizchevroil, and Sakhalin-2. General License 121 does not authorize any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations (“RuHSR,” 31 CFR Part 587), including transactions involving any person blocked pursuant to the RuHSR, unless separately authorized. This authorization expires at 12:01 a.m. eastern daylight time on June 28, 2025.

SDN List Designations Targeting Russia’s Energy Sector and Issuance of Associated General Licenses

In tandem with the foregoing actions, on January 10, OFAC and the State Department designated for property-blocking sanctions for operating in Russia’s energy sector, pursuant to both E.O. 14024 and E.O. 13662, more than 400 individuals, entities, and vessels involved in Russia’s energy sector by adding them to OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”). OFAC’s designations notably included two of Russia’s largest oil producers and exporters, Gazprom Neft and Surgutneftegas, along with more than two dozen of their subsidiaries. OFAC also designated several Russian energy executives, including the CEOs of Gazprom Neft and several major Russian energy companies that are not themselves designated as SDNs: Lukoil (which is subject to OFAC’s Directive 4 issued pursuant to E.O. 13662 and list-based export controls implemented by the U.S. Department of Commerce, Bureau of Industry and Security), Tatneft, and Zarubezhneft. The designations also included dozens of oil traders and oilfield service providers, including individuals and entities based in Russia, the United Arab Emirates (“UAE”), Hong Kong, and Latvia.

OFAC’s designations also included more than 180 vessels engaged in the Russian oil trade. These designations included dozens of vessels that are part of the so-called “shadow fleet” of vessels that facilitate the illicit trade of Russian oil, including vessels flying the flags of Antigua and Barbuda, Barbados, Belize, Cook Islands, Djibouti, Gabon, Liberia, Panama, San Marino, Sierra Leone, and Vietnam. OFAC also designated dozens of tankers owned by Sovcomflot, Russia’s state-owned shipping company. Sovcomflot itself—which was already designated as an SDN pursuant to E.O. 14024 for operating or having operated in the marine sector of the Russian economy—was also designated pursuant to E.O. 13662 and E.O. 14024 for operating in the energy sector of the Russian economy. OFAC also designated several other Russia-based shipping companies, including Gazpromneft Marine Bunker LLC and Rosnefteflot, the marine transportation arm of the Russian oil company Open Joint-Stock Company Rosneft Oil Company, and dozens of vessels owned by those companies.

Additionally, OFAC’s designations included several financial and insurance entities associated with Russia’s oil trade, including Surgutneftegasbank, Ingosstrakh Insurance Company, and Alfastrakhovanie Group; the latter two entities were previously sanctioned by the UK. Unlike the above designations, these entities were designated pursuant to E.O. 13662 and E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.

The U.S. State Department’s designations included more than a dozen senior officials of State Atomic Energy Corporation Rosatom (“Rosatom”), several entities operating Russian oil and gas projects (the Portovaya LNG terminal, the Cryogas Vysotsk LNG terminal, and the Vostok Oil project (as well as a subsidiary of the Vostok operator)), three Chinese and Kazakh companies that provide material support to Sovcomflot, several Chinese and Indian entities that support the U.S.-sanctioned Arctic LNG 2 Project, more than a dozen Russia-based oilfield service providers, and more than two dozen entities involved in Russia’s metals and mining industry, including importers of raw materials used in Russia’s defense sector.

Further, on January 15, OFAC and the State Department designated or re-designated under additional sanctions authority nearly 250 individuals and entities for property-blocking sanctions. According to the State Department’s press release, this “action aims to thwart sanctions evasion, particularly by actors based in [China], and to degrade Russia’s military industrial base.” The designations include Chinese, Russian, and other third-country individuals and entities designated for operating or having operated in sectors of the Russian Federation economy subject to sanctions under Section 1(a)(i) of E.O. 14024, including the aerospace, manufacturing, technology, and defense and related materiel sectors. The State Department’s designations on January 15 also included additional subsidiaries of Rosatom and a number of non-Russian parties determined to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of parties designated under E.O. 14024. Finally, the most recent designations by the State Department included parties operating in Russia’s financial services sector (and enabling wealth obfuscation by certain sanctioned parties), construction sector, and transportation sector.

In addition, on January 15, OFAC designated a Kyrgyz Republic-based bank pursuant to its authority under E.O. 14024, as amended by E.O. 14114, to impose sanctions on foreign financial institutions for having conducted or facilitated any significant transaction or transactions, or provided any service, involving Russia’s military-industrial base, including any person subject to property-blocking sanctions pursuant to E.O. 14024 or the sale, supply, or transfer of certain critical items to Russia. (Additional information about this authority to target foreign financial institutions is included in our client alerts from January 2, 2024, and June 18, 2024.) OFAC separately designated parties in Russia and China for working to set up regional clearing platforms to evade sanctions, pursuant to the authority in E.O. 14024 and E.O. 13662 to designate parties operating in Russia’s financial service sector. OFAC also re-designated pursuant to E.O. 13662 almost 100 entities already subject to property-blocking sanctions pursuant to E.O. 14024 for operating in the financial services, energy, and defense and related materiel sectors of the Russian Federation economy.

U.S. persons are broadly prohibited from transacting or dealing with SDNs and entities that SDNs own 50 percent or more, directly or indirectly, individually or in the aggregate with other SDNs, absent authorization from OFAC (via a general or specific license). In addition, the property of such sanctioned persons must be blocked and reported to OFAC when it is in or comes into the United States or the possession or control of a U.S. person. Further, non-U.S. persons may be exposed to U.S. sanctions if they are determined to have “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” any person whose property is blocked pursuant to E.O. 14024 or E.O. 13662. Similarly, non-U.S. financial institutions may be exposed to U.S. sanctions if they are determined to have conducted or facilitated any significant transactions or provided any services involving a person subject to property-blocking sanctions pursuant to E.O. 14024. In each case, however, non-U.S. persons generally would not be at risk of exposure to such sanctions if they are engaged in conduct that would be authorized for U.S. persons to undertake pursuant to an OFAC general license.

The designation of parties on January 10 and 15, 2025, under E.O. 13662, in addition to their designations under E.O. 14024, has implications with respect to the exposure of non-U.S. persons to secondary sanctions and the possible lifting of such sanctions in the future.

First, as to the application of secondary sanctions, Sections 226 and 228 of the Countering America's Adversaries Through Sanctions Act (“CAATSA,” PL 115-44) provide for the imposition of sanctions against non-U.S. persons engaged in certain transactions involving persons subject to U.S. sanctions pursuant to E.O. 13662 (but not sanctions imposed pursuant to E.O. 14024 which was issued after CAATSA was enacted). Specifically, under Section 226 of CAATSA, the President is required to impose sanctions on a foreign financial institution that knowingly facilitates a significant transaction on behalf of any Russian person included on the SDN List pursuant to several authorities, including E.O. 13662. The authorized sanction is a prohibition on the opening, and a prohibition or imposition of strict conditions on the maintaining, of a correspondent or payable-through account in the United States for the foreign financial institution. Under Section 228 of CAATSA, the President is required to impose property-blocking sanctions on any foreign person that the President determines knowingly (i) materially violates, attempts to violate, conspires to violate, or causes a violation of any license, order, regulation, or prohibition contained in or issued pursuant to certain authorities, including E.O. 13662; and (ii) “facilitates a significant transaction or transactions” for or on behalf of persons subject to sanctions imposed by the United States with respect to the Russian Federation under certain authorities, including E.O. 13662. See FAQ 546. Again, however, non-U.S. persons generally would not be at risk of exposure to such sanctions if they are engaged in conduct that would be authorized for U.S. persons pursuant to an OFAC general license.

Second, as to the possible lifting of sanctions, in order to terminate the application of sanctions imposed pursuant to E.O. 13662, Section 216 of CAATSA requires the President to submit for Congressional review a report describing the proposed action/termination and the rationale for it. The President may not take such action during the Congressional review period specified under CAATSA (a minimum of 30 days) or until Congress passes a joint resolution of approval. Congress may also pass a joint resolution of disapproval, which could be subject to a Presidential veto that Congress may seek to override. This means that Congress could prevent the lifting of sanctions against a person whose property is blocked pursuant to E.O. 13662.

In parallel with the foregoing SDN designations, OFAC also issued several general licenses pursuant to the RuHSR authorizing certain transactions with these newly designated parties:

• General License 117 authorizes through 12:01 a.m. eastern standard time on February 27, 2025, transactions otherwise prohibited by E.O. 14024 that are ordinarily incident and necessary to the wind down of transactions involving certain entities designated on January 10, 2025, including Gazprom Neft, Surgutneftegas, Ingosstrakh Insurance Company, and any entity that they own 50 percent or more, directly or indirectly, individually or in the aggregate, provided that any payments to a blocked person are made into a blocked account in accordance with the RuHSR.
• General License 118 authorizes through 12:01 a.m. eastern standard time on February 27, 2025, transactions that are ordinarily incident and necessary to (a) the divestment or transfer, or the facilitation of the divestment or transfer, to a non-U.S. person of debt or equity issued or guaranteed by Ingosstrakh Insurance Company, Limited Liability Company Plant for the Production of Propeller Steering Columns Sapphire, Open Joint Stock Company Volzhsky Abrasive, Gazprom Neft, Surgutneftegas, or any entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by the above persons (“Covered Debt or Equity” for purposes of this general license); (b) facilitating, clearing, and settling trades of Covered Debt or Equity that were placed prior to 4:00 p.m. eastern standard time on January 10, 2025; or (c) the wind down of derivative contracts entered into prior to 4:00 p.m. eastern standard time on January 10, 2025 that (i) include a blocked entity described above as a counterparty or (ii) are linked to Covered Debt or Equity, provided that any payments to a blocked person are made into a blocked account in accordance with the RuHSR.
• General License 119 authorizes through 12:01 a.m. eastern standard time on February 27, 2025, transactions that are ordinarily incident and necessary to the official business of diplomatic or consular missions located outside of the Russian Federation and involve Gazprom Neft or any entity that Gazprom Neft owns 50 percent or more, directly or indirectly. OFAC also issued FAQ guidance clarifying that transactions ordinarily incident and necessary to the official business of diplomatic or consular missions include standard foreign diplomatic or consular mission operations, including bank transactions related to the operation of those missions, such as salary payments, expense reimbursement for employees, or payments of utilities for diplomatic or consular facilities. See FAQ 1201.
• General License 120 authorizes through 12:01 a.m. eastern standard time on February 27, 2025, transactions that are ordinarily incident and necessary to (a) safe docking and anchoring in port of any vessels in which any blocked entity listed in the Annex to the general license has a property interest (the “blocked vessels”); (b) the preservation of the health or safety of the crew of any such blocked vessels; or (c) emergency repairs of any such blocked vessels or environmental mitigation or protection activities relating to any such blocked vessels, provided that any payments to a blocked person are made into a blocked account in accordance with the RuHSR. Additionally, the general license authorizes through 12:01 a.m. eastern standard time on February 27, 2025, transactions ordinarily incident and necessary to the delivery and offloading of cargo involving the blocked entities listed in the Annex provided that the cargo was loaded prior to January 10, 2025. The general license does not authorize new commercial contracts involving the property or interests in property of any blocked persons, including the blocked persons described in the Annex, except as specifically authorized by the general license.
• General License 122 authorizes through 12:01 a.m. eastern standard time on March 1, 2025, transactions that are ordinarily incident and necessary to the wind down of transactions involving certain entities designated on January 15, 2025, including any entity that they own 50 percent or more, directly or indirectly, individually or in the aggregate, provided that any payments to a blocked person are made into a blocked account in accordance with the RuHSR.
• General License 123 authorizes through 12:01 a.m. eastern standard time on March 1, 2025, transactions that are ordinarily incident and necessary to (a) the divestment or transfer, or the facilitation of the divestment or transfer, to a non-U.S. person of debt or equity issued or guaranteed by Wafangdian Bearing Company Limited (“Wafangdian”), or any entity in which Wafangdian owns, directly or indirectly, a 50 percent or greater interest (“Covered Debt or Equity” for purposes of this general license); (b) facilitating, clearing, and settling trades of Covered Debt or Equity that were placed prior to 4:00 p.m. eastern standard time on January 15, 2025; or (c) the wind down of derivative contracts entered into prior to 4:00 p.m. eastern standard time on January 15, 2025, that (i) include a blocked entity described above as a counterparty or (ii) are linked to Covered Debt or Equity, provided that any payments to a blocked person are made into a blocked account in accordance with the RuHSR.

Importantly, none of the above general licenses authorizes transactions prohibited by Directive 2 under E.O. 14024, which prohibits U.S. financial institutions from opening or maintaining a correspondent or payable-through account for or on behalf of certain foreign financial institutions and processing transactions involving certain foreign financial institutions (principally Sberbank and certain of its affiliates), or Directive 4 under E.O. 14024, which prohibits U.S. persons from engaging in transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation. Moreover, none of the above general licenses authorizes transactions that are otherwise prohibited by the RuHSR.

In addition, OFAC revoked General License 93, which had previously authorized transactions involving vessels that were not themselves designated on the SDN List but were blocked due to their ownership by Sovcomflot.

Finally, on January 15, OFAC issued General License 26A (which replaces and supersedes General License 26, which had been issued on January 10) under its Ukraine-/Russia-Related Sanctions Regulations (“URSR,” 31 C.F.R. Part 589), which clarifies that all transactions that are now authorized or exempt under the RuHSR (including under a general or specific license), and which involve certain persons blocked under both the URSR and the RuHSR and listed in the Annex to the general license (and entities that they own 50 percent or more, directly or indirectly, individually or in the aggregate), are also authorized under the URSR. Notably, General License 26 does not authorize any transaction prohibited by a directive issued pursuant to E.O. 13662 (i.e., the legacy sectoral sanctions directives dating back to 2014) or involving blocked persons other than those listed in the Annex. See also FAQ 1215.

Revised General Licenses 8L and 115A

OFAC also issued revised versions of two general licenses relating to transactions involving the Russian energy industry.

General License 8L authorizes through 12:01 a.m. eastern daylight time on March 12, 2025, transactions that are ordinarily incident and necessary to the wind down of transactions related to energy and involving one or more of the following blocked parties:

• State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
• Public Joint Stock Company Bank Financial Corporation Otkritie;
• Sovcombank Open Joint Stock Company;
• Public Joint Stock Company Sberbank of Russia;
• VTB Bank Public Joint Stock Company;
• Joint Stock Company Alfa-Bank;
• Public Joint Stock Company Rosbank;
• Bank Zenit Public Joint Stock Company;
• Bank Saint-Petersburg Public Joint Stock Company;
• National Clearing Center (“NCC”);
• Any entity owned 50 percent or more, directly or indirectly, individually or in the aggregate by the foregoing persons; and
• Central Bank of the Russian Federation.

For the purpose of the general license, “related to energy” means “the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources.”

General License 8L replaces and supersedes General License 8K, which had broadly authorized all transactions related to energy and involving one or more of the same sanctioned entities. General License 8L therefore represents a considerable narrowing of the authorization previously extended by General License 8K, as General License 8L only authorizes transactions ordinarily incident and necessary to wind-down activities, and is only available until March 12, 2025.

General License 115A authorizes through 12:01 a.m. eastern daylight time on June 30, 2025, all transactions related to civil nuclear energy involving the same entities listed in General License 8L as well as Gazprombank Joint Stock Company and any entity that it owns 50 percent or more, directly or indirectly, individually or in the aggregate with one or more entities listed in General License 8L. For the purposes of the general license, the term “related to civil nuclear energy” means transactions undertaken “solely to maintain or support civil nuclear projects initiated before November 21, 2024.” These include the following activities: “the extraction, production, refinement, conversion, enrichment, fabrication, transport, or purchase of uranium in any form; the production, generation, transmission, or exchange of nuclear power, fuel, or waste; and the operation of civil nuclear energy projects.” See FAQ 1203. The general license does not authorize transactions related to the Paks II nuclear power plant project or any successor project to the Paks II.

General License 115A replaces and supersedes General License 115, which had authorized transactions related to civil nuclear energy only as to Gazprombank. General License 115A thus expands the number of sanctioned financial institutions with which transactions related to civil nuclear energy (as defined in the general license) are authorized, at least until June 30, 2025.

UK Sanctions

Asset-Freezing Sanctions Targeting Gazprom Neft and Surgutneftegas

On January 10, 2025, the UK announced that it has designated Gazprom Neft and Surgutneftegas for asset-freezing sanctions, aligning with similar measures taken by the United States. These new designations were accompanied by the issuance of two general licenses, which temporarily allow certain transactions with the sanctioned entities under specified conditions:

• General License INT/2025/5635700: This general license permits the continuation of business operations involving Gazpromneft-Sakhalin LLC, provided the business operations are connected to the “Exempt Project,” which is defined in Schedule 1 of the license and currently includes only the Sakhalin-2 project. The permitted business operations include:
  • Payments to or from Gazpromneft-Sakhalin LLC or any third party under new or existing obligations or contracts related to the “Exempt Project;” and
  • Processing payments in accordance with the above conditions.
  These permitted transactions are time-limited and apply from the “Date of Application” to the “Date of Expiration.” In relation to the Sakhalin-2 project, the effective period runs from January 10, 2025, to June 28, 2025.
• General License INT/2025/5635701: This general license allows individuals and entities to wind down or divest from transactions involving Gazprom Neft, Surgutneftegas, and any entity incorporated anywhere in the world owned or controlled, directly or indirectly, by Gazprom Neft and/or Surgutneftegas.

The general license takes effect from January 10, 2025, and expires on February 27, 2025.

The EU has not, thus far, adopted asset-freezing sanctions against Gazprom Neft or Surgutneftegas. However, Gazprom Neft is already subject to significant EU sanctions, pursuant to Article 5aa of Council Regulation No. 833/2014. Those sanctions broadly restrict EU persons from engaging, directly or indirectly, in any transaction with Gazprom Neft or non-EU majority-owned subsidiaries thereof, subject to certain exemptions set out in Article 5aa.

OFAC-OFSI MOU

As noted, on January 13, 2025, OFAC and OFSI published a non-binding MoU that is intended to strengthen cooperation between OFAC and OFSI in administering and enforcing economic sanctions. The MoU states that such cooperation could include conducting coordinated investigations. The MoU also sets out several terms and conditions that govern the process for OFAC and OFSI to request and share information relevant to sanctions administration and enforcement.

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We are closely monitoring developments concerning the U.S., UK, and EU sanctions against Russia, and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.

Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, and Frankfurt—regularly advises clients across business sectors, and would be well-placed to provide support in connection with these new sanctions. Our trade controls lawyers also work regularly with Covington's Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders.

If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls practice.