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Exports of Dual-Use Goods Restricted to Russian Oil Field

Friday, August 07, 2015
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has issued a final rule that, effective Aug. 7, adds the Yuzhno-Kirinskoye oil and gas field located in Russia’s Sea of Okhotsk to the list of entities restricted from receiving exports of dual-use goods from the United States. As a result, license applications for such transactions will be reviewed with a presumption of denial and no license exceptions will be available.

BIS explains that this field is reported to contain substantial reserves of oil and that it has determined that exports, reexports and transfers (in-country) of all items subject to the Export Administration Regulations to this field by any person without first obtaining a BIS license present an unacceptable risk of use in, or diversion to, the activities specified in the Russian industry sector sanctions, namely exploration for or production of oil or gas in deepwater locations.

This rule also revises the Russian industry sector sanctions regulations to clarify that the additional prohibition described in section 746.5, paragraph (a)(2), as part of the BIS “is informed” process may be based on an end-user or end-use when BIS determines there is an unacceptable risk of use in, or diversion to, the activities specified in paragraph (a)(1) in Russia. BIS states that this clarification does not change the scope of section 746.5 but rather clarifies the cases in which the “is informed” process will be used to assist exporters, reexporters and transferors to “know” when an export, reexport or transfer (in-country) is subject to the license requirements specified in this section.

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