January, 2024 - EU adopts twelfth package of sanctions against Russia

On the 18th December, 2023 the EU adopted a twelfth sanctions package against Russia.

The main purpose of this package is to combat sanction circumvention and deal with loopholes. In summary, the twelfth sanctions package introduces further restrictions on imports and exports on Russia and will be in force from 20th February, 2024. The restrictions/requirements that are most relevant to our Members are summarised below.

Attestation / Price Cap

Enhanced attestation requirements have been introduced, with a new requirement for service providers with no access to the purchase price per barrel to obtain itemised price information for ancillary costs, such as insurance and freight, to be shared upon request throughout the supply chain of Russian oil trade. It has not been identified how this new attestation process will work but the purpose of the new requirement is to provide service providers down the supply chain, such as ship owners and insurers, with the right to request the sharing of information related to the pricing as part of their due diligence procedures, when they do not have access to this information themselves.

It was noticed that ship-to-ship transfers were used to conceal the origin/destination of cargo and manipulation of the automatic identification system while transporting Russian crude oil or petroleum products.  The package also provides for information sharing between the Commission, with the support of the European Maritime Safety Agency, and the Member States to further enforce the price cap mechanism and to identify ships and entities carrying out one or more deceptive prices.

However, the Price Cap Coalition agreed that specific projects that are essential for the energy security of certain third countries may be exempted from the price cap. An example is the exemption provided in relation to the Sakhalin-2 Project, located in Russia which was extended until 28th June, 2024 in order to ensure Japan’s energy security.

Sale of Tankers / Restrictions

A new article was introduced, Article 3q, with the view to further reinforce the prohibition on EU entities from selling/transferring ownership of tankers to Russian interests, unless an authorisation is obtained. New prospective and retrospective reporting requirements were also introduced by Article 3q(3) and Article3q(4), which apply to sales of tanker to any country.

The sale/transfer of tankers by EU entities to a third country must be notified to the Member State. Further, any sale or transfer of ownership of tanker from EU citizens to third countries after 5th December, 2022 and prior to 19th December, 2023 shall be notified to the competent authorities of the Member States before 20th February, 2024. The purpose is to contain the identities of the seller and purchaser, incorporation documents, IMO number and call sign of the tanker.

Restrictions on import and export of specific items

A comprehensive ban on import, purchase and transfer of diamonds has been introduced, as they are a vital revenue source for Russia. A prohibition has also been imposed on the import and export of chemicals, lithium batteries, thermostats, DC monitors and servomotors for unmanned aerial vehicles, machine tools and machinery as the aforementioned items may contribute to Russia’s military and technological enhancement. Restrictive measures were also applied on imports and exports of iron and steel from a particular list of partner countries, which also extends to specific steel products.

The restrictions are focused on certain goods that reinforce Russia’s industrial base and by merging different parts of existing exports and applying other parts at higher levels makes it easier for customs officials to check compliance.

Members are reminded that EU sanctions apply within the territory of the European Union; on board any ship under the jurisdiction of an EU Member State; to any person inside or outside the territory of the EU who is a national of a Member State; to any legal person, entity or body, inside or outside the territory of the EU, which is incorporated or constituted under the law of a Member State and to any legal person, entity or body in respect of any business done in whole or in part within the EU. We urge Members to frequently review the sanctions position when dealing with any country where sanctions are applicable as the position may change rapidly.

UK and US  

In line with the EU, the US and UK have updated their guidance and requirements in respect of price cap attestations which will also come into force on 20th February, 2024.   Both the US and UK will require attestations to be provided per voyage going forward and there will also be a requirement to itemise ancillary costs associated with the voyage, such as freight and insurance. Owners, managers, P&I and Insurance providers are required to keep records for up to five years and provide attestations and ancillary cost information in case the same are requested by the authorities.

As always, if Members have any questions in relation to the above issues they are invited to contact the Club for further information.