Sanctions tracker – EU update on Russian oil price cap and eighth sanctions package

Earlier this month, the G7 announced a plan to impose a cap on the price importers pay for Russian oil (see our previous blogpost for further detail).  On 28 September, President von der Leyen made a statement regarding the EU’s intended implementation of this plan, as part of an eighth sanctions package in response to the escalation of the situation in Ukraine.

The announcement indicates that the new sanctions package will comprise four key elements:

1. further designations of individuals and entities;
2. further trade sanctions;
3. the oil price cap; and
4. the listing of individuals involved in the circumvention of sanctions.

We discuss each of these areas in more detail below.

Additional designations

High Representative/Vice-President Borrell issued a separate statement providing further detail on this element of the package. He explained that the following will be targeted as new designated persons under the existing asset freeze:

• the proxy Russian authorities in Donetsk, Luhansk, Kherson and Zaporizhzhia;
• other Russian individuals who are said to have organised and facilitated the recent “referenda” in the above areas of Ukraine;
• high-ranking Ministry of Defence officials, along with others who support the Russian armed forces;
• those who are said to be involved in spreading false information about the war and donating funds to Russian occupied areas of Ukraine; and
• as mentioned at point 4 above, those involved in the circumvention of sanctions.

Trade sanctions

The new trade sanctions are stated to comprise “sweeping new import bans on Russian products”, along with an extension of the existing export restrictions, including in relation to additional aviation items, electronic components and specific chemical substances.

The proposals also contain a further ban on providing services to Russia, and a prohibition for EU nationals to sit on governing bodies of Russian state owned enterprises.

Mr Borrell also stated that the geographical scope of the existing restrictions relating to Crimea, Donetsk and Luhansk will be extended to all non-government-controlled areas of Ukraine, including Zaporizhzhia and Kherson.

Oil price cap

The statements do not give any further detail on how the G7 oil price cap will be implemented, simply noting that the eighth package will lay out the legal basis for the price cap.

Circumvention

President von der Leyen referred to the EU “stepping up” its efforts to crack down on the circumvention of sanctions. As noted above in relation to designations, this will involve the ability to list individuals as subject to the asset freeze where they have been deemed to circumvent EU sanctions. The example given is of a party buying goods in the EU, bringing them to a third country and then transferring them on to Russia.

Interestingly, the statement only refers to the designation of “individuals” (and not companies) in these circumstances, but it remains to be seen how the new designation category is defined in the legislation which effects these new measures.

Comment

Further detail on the new measures will be available once the relevant legislation has been published. This will require unanimity from all 27 Member States and so it is not currently clear when the legislation will be published and the new measures will take effect.

At the time of writing, no formal statements had been made in relation to any new package of UK sanctions or the UK’s plans to implement the G7 oil price cap. However, on 26 September, the UK announced the addition of 92 individuals and entities to its asset freeze list in response to the “referenda” mentioned above. The targets (listed in HM Treasury’s notice) include 33 officials involved in the conduct of the “referenda”, a PR agency, a security documents company, four oligarchs, and 55 board members of state-linked organisations.