UK Oil Ban
The new restrictions are introduced under The Russia (Sanctions) (EU Exit) (Amendment) (No.14) Regulations 2022 (the “UK 14th Amendment”) which amend the Russia (Sanctions) (EU Exit) Regulations 2019 (as amended, the “UK Regulations”). The UK 14th Amendment introduces, amongst other things, a prohibition on (1) the import, acquisition and supply or delivery of Russian oil and oil products into the UK, and (2) the provision of technical, financial and brokering assistance relating to such products destined for the UK.
The oil ban comes into force on 31 December 2022 and, broadly speaking, brings the UK in line with Article 3m of Council Regulation (EU) 833/2014 (as amended, the “EU Regulations”).
Impact on UK Insurance Sector
The restriction on providing financial services to oil and oil products has implications for the UK’s insurance sector, given that the definition of “financial services” includes the provision of insurance and reinsurance services (as defined under Section 61(1)(a) of the Sanctions and Anti-Money Laundering Act 2018).
As a result, from 31 December 2022, UK insurers will be prohibited from providing insurance services in respect of the import, acquisition and supply or delivery of the listed oil and oil products that originate in Russia or are located in Russia, that are destined for the UK.
Notably, however, there is no equivalent UK restriction to that of Article 3n of the EU Regulations.
There are limited exceptions to the oil ban, including if the oil and oil products are cumulatively: (i) non-Russian origin; (ii) not owned by a person connected with Russia; and (iii) only being loaded in, departing from or transiting through Russia.
Further, the prohibitions will not apply to products necessary for the purposes of a UK petroleum project, meaning an oil or gas exploration or production project that is wholly or partially located within the United Kingdom or other specified areas.
Alignment with EU Oil Ban
There are subtle differences between the two jurisdictions’ restrictions. For example, the EU restrictions are limited to oil products under commodity codes 2709 00 (crude) and 2710 (other petroleum oils). Meanwhile, the UK sanctions include a significantly broader list, comprising products falling under commodity codes 2709 to 2715 (including petroleum gases and jelly), 2207 (ethyl alcohol) and 3826 (biodiesel oil).
Further, whilst the EU sanctions separate the wind-down periods for CN Code 2709 (crude, 5 December 2022) and CN Code 2710 (certain petroleum oils, 5 February 2023), the expansive list of oil and oil products under the UK restrictions are simply prohibited from 31 December 2022. Accordingly, under the UK rules, all transactions caught by the new restrictions described above must be concluded by 30 December 2022.