President Biden Issues Executive Order Banning Import Of Certain Russian-Origin Energy Products – International Law

On March 8, 2022, President Biden issued an executive order (EO) broadly
prohibiting imports of Russian-origin energy products into the US,
including oil, liquefied natural gas (LNG), and coal. This latest
measure follows several actions taken over the last several weeks
to target Russia’s economy and other critical sectors in
response to its continued activities in Ukraine.

Effective immediately, the following Russian products are
banned:

• Crude oil;




• Petroleum;




• Petroleum fuels, oils, and products of their distillation;




• LNG;




• Coal; and




• Coal products

The EO also prohibits any new investment in the Russian energy
sector by a US person and restricts US persons from approving,
financing, facilitating, or guaranteeing a transaction by a foreign
person if that transaction would be prohibited under the EO. The EO
defines new investment in the Russian energy
sector as “a transaction that constitutes a commitment or
contribution of funds or other assets for, or a loan or other
extension of credit to, new energy sector activities (not including
maintenance or repair) located or occurring in the Russian
Federation.” The energy sector is defined as “the
procurement, exploration, extraction, drilling, mining, harvesting,
production, refinement, liquefaction, gasification, regasification,
conversion, enrichment, fabrication, or transport of petroleum,
natural gas, liquified natural gas, natural gas liquids, or
petroleum products or other products capable of producing energy,
such as coal or wood or agricultural products used to manufacture
biofuels, the development, production, generation, transmission or
exchange of power, through any means, including nuclear,
electrical, thermal, and renewable.”

The Treasury Department’s Office of Foreign Assets Control
(OFAC) issued general license (GL) 16, which permits
the import of these products through April 22, 2022, if pursuant to
a written contract or agreement made prior to the March 8 EO. GL 16
does not authorize new contracts. Several FAQs were also issued to
clarify the scope of the prohibition. The EO only applies to
certain Russian-origin products and does not prohibit imports of
non-Russian-origin energy products that transit or depart from
Russia. Additionally, the EO does not prohibit US persons from
engaging in transactions to sell or re-direct shipments destined to
the US that were laden on or after March 8.

Other Western allies also announced their intention to enact
similar bans. The UK stated it would begin phasing out imports of
Russian oil and oil products. Meanwhile, the European Commission published its plans to cut the EU’s
dependency on Russian energy by two-thirds by the end of this
year.

Sanctions imposed thus far largely have avoided Russia’s
energy sector, likely due in part to the country’s status as
the second largest exporter of petroleum. Efforts are underway to
soften the blow, including coordinating the release of barrels of
oil from strategic reserves as well as encouraging an up-tick in
production in places like Saudi Arabia, Venezuela, the United
States, and others.

Companies actively involved in Russia’s energy sector should
be aware of these new restrictions. More broadly, the coordinated
effort among allies signals further sanctions and trade
restrictions may be imposed if the crisis in Ukraine continues.

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