Ukraine-related Sanctions: Expanded U.S. Sanctions Against Russian Financial, Energy, and Defense Sectors

September 14, 2014

On September 12, 2014, the United States imposed additional sectoral sanctions on the Russian financial, energy, and defense sectors. This memorandum provides further detail on these developments, and a brief summary is below:

  • The United States tightened restrictions on new debt issued by listed Russian financial institutions, reducing the allowable maturity from 90 days to 30 days. Equity sanctions were unchanged. Sberbank was added to the list of previously sanctioned financial institutions (Bank of Moscow, VEB, VTB, Gazprombank, and Russian Agricultural Bank).
  • Restrictions on new debt issued by listed Russian energy companies were not changed, nor were equity restrictions added. Transneft and Gazprom Neft were added to the list of previously sanctioned energy companies (Novatek and Rosneft).
  • Sectoral sanctions were created for the Russian defense sector, prohibiting new debt transactions with a maturity of greater than 30 days. Only one entity, Rostec, was listed for sectoral sanctions, but five additional Russian defense firms (OAO ‘Dolgoprudny Research Production Enterprise,’ Mytishchinski Mashinostroitelny Zavod OAO, Kalinin Machine Plant JSC, Almaz-Antey GSKB, and JSC NIIP) were added to the SDN List and the Department of Commerce’s Entity List and are now subject to comprehensive sanctions and export controls.
  • Sanctions against Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil were also tightened to prohibit the provision of technical assistance or other services (except financial services) or U.S.-origin goods of any kind to specified companies for these projects (Gazprom, Gazprom Neft, Lukoil, Rosneft, and Surgutneftegaz). Similar sanctions prohibiting the export, re-export, or transfer of U.S.-origin goods or technology to the listed firms for these uses were added by the Department of Commerce.

We will continue to monitor these developments closely. Please feel free to raise any question you may have with any of your regular contacts at the Firm, or with Paul Marquardt in our Washington office.