Client Alert:

Raising The Bar: EU Expands Sanctions on Russian Maritime and Energy Operations

Raising The Bar: EU Expands Sanctions on Russian Maritime and Energy Operations

On June 24, 2024, the EU Council enacted Regulation (EU) 2024/1745, introducing stricter sanctions targeting Russia's transport, maritime and energy sectors. The stringent new measures aim to prevent the circumvention of existing sanctions and to increase economic and financial pressure on Russia amid the ongoing conflict in Ukraine.

The regulation imposes several key restrictions on maritime transport. Re-flagged Russian vessels are now prohibited from accessing EU ports, with specific conditions for vessels that have changed their flag after April 16, 2022. These conditions include provisions for vessels declared abandoned or subjected to a forced sale by competent national authorities before February 24, 2022, ensuring that flag changes cannot be used to bypass sanctions. To prevent sanction circumvention, additional measures mandate enhanced due diligence and reporting for EU operators for reflagged vessels.

The EU has also expanded the list of sanctioned vessels and entities, particularly those contributing to Russia’s warfare. Notably, exemptions exist for the transport of nuclear fuel and goods essential for civil nuclear capabilities.

Further, the regulation extends prohibitions to road and air transport. Any road transport undertaking established in the EU, owned 25% or more by Russian nationals or entities, is barred from operating within the EU territory. Air transport restrictions now prevent Russian-operated or registered aircrafts, including those controlled by Russian entities, from landing in, taking off from, or overflying EU territory. These measures ensure thorough compliance by requiring detailed ownership and passenger information.

In the energy sector, the regulation enforces a ban on reloading services for transshipment operations of Russian-origin LNG within the EU, with exceptions only to ensure Member States' energy supply. The embargo extends to Russian-origin diamonds and other goods that contribute to Russia’s revenues, with specified exemptions.

Cross-sectoral impacts include broader financial transaction restrictions and rigorous compliance requirements. EU entities must conduct increased due diligence and ensure subsidiaries outside the EU comply with sanctions, mitigating risks of indirect support to Russia. Legal and operational strategies now necessitate incorporating no-Russia clauses in contracts and ensuring robust compliance measures are in place.

These sanctions represent a significant tightening of the EU's economic measures against Russia, aiming to close loopholes and ensure the impact of existing sanctions. For detailed guidance please contact our office.



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