The Department of Commerce’s Bureau of Industry and Security (BIS) has published a much-anticipated Frequently Asked Questions (FAQs) guide to its Russia sanctions. The FAQs guide primarily addresses BIS’s broad energy-sector sanctions, which prohibit the export, reexport, or in-country transfer of certain items without a license when the person either: (1) knows or is informed that the item will be used directly or indirectly in exploration for, or production of, oil or gas in Russian deepwater locations (greater than 500 feet), Arctic offshore locations, or Russian shale formations, or (2) is unable to determine whether the item will be used in these types of projects in Russia.
The explanations and clarifications issued by BIS include the following:
- BIS specifically defined “Russia” for purposes of the sanctions to include “the territory of Russia and any other territory or marine area, including the exclusive economic zone and continental shelf, over which the Government of Russia claims sovereignty, sovereign rights, or jurisdiction, provided that the Government of Russia exercises partial or total de facto control over the area or derives a benefit from economic activity in the area pursuant to international arrangements.”
- The list of controlled items that require a license when for use in the energy projects specified above includes several EAR99 items identified by Schedule B numbers. The new FAQs state that the export restrictions extend to parts, components, accessories, and attachments for use in or with the commodities identified in these Schedule B numbers.
- Further, the agency clarified that restricted shale projects include those projects for exploration for, or production of, oil or gas from a shale formation, not projects involving exploration or production through shale to locate or extract oil or gas in reservoirs below the shale formation.
- BIS also noted that it relied on the U.S. Department of the Interior, Bureau of Ocean Management’s standard for what constitutes “deepwater” when it defined this term as “greater than 500 feet,” even though industry may consider deepwater to be depths of more than 1,500 feet.
BIS’s new FAQs provide some helpful guidance to exporters, particularly those involved with Russia’s oil and gas sector. Nonetheless, there is still some uncertainty regarding the scope of these sanctions, including just how broadly BIS will interpret the sanctions’ “directly or indirectly” language.