OFAC Sanctions Key Rosneft Subsidiary And Executive For Operating In The Oil Sector Of Venezuela

Author:Mr Wynn Segall, Nnedinma C. Ifudu Nweke, Andrew R. Schlossberg, Mahmoud Baki Fadlallah, Dallas Woodrum and Johann Strauss
Profession:Akin Gump Strauss Hauer & Feld LLP
 
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Key Points

On February 18, 2020, OFAC designated Rosneft Trading, S.A. (Rosneft Trading), a subsidiary of Russia-based Open Joint-Stock Company Rosneft Oil Company (Rosneft Oil Company), and its president, Didier Casimiro, on the SDN List for brokering crude oil shipments from Venezuela—activities that are restricted under E.O. 13850. As a result of this action, U.S. persons are generally prohibited from doing business with Rosneft Trading, Didier Casimiro, and entities they own 50 percent or more, absent OFAC authorization. These sanctions do not apply to Rosneft Oil Company or related entities that are not 50 percent or more owned by Rosneft Trading or Casimiro. OFAC has also issued General License 36, which authorizes U.S. persons to engage in otherwise prohibited activities in order to wind-down transactions involving Rosneft Trading and entities that it owns by 50 percent or more. This license is valid through 12:01 a.m. EDT on May 20, 2020. Non-U.S. persons could be subject to sanctions if OFAC determines that they provide material assistance, goods or services to Rosneft Trading and/or Casimiro. OFAC states in an FAQ that non-U.S. persons will not be exposed to sanctions if they engage in activities with Rosneft Trading during the wind-down period that are consistent with General License 36, but such authorized wind-down activities would not include entering into "new business" with Rosneft Trading. Background and Summary of Designations

On February 18, 2020, the U.S. Department of the Treasury, OFAC designated Rosneft Trading, a Swiss-incorporated subsidiary of Rosneft Oil Company, and its president, Didier Casimiro, as SDNs for engaging in activities deemed sanctionable under Executive Order 13850—specifically, operating in the oil sector of the Venezuelan economy, and in Casimiro's case, acting on behalf of Rosneft Trading. In a press release accompanying the designation, the U.S. State Department explained that "[a]s the primary broker of global deals for the sale and transport of Venezuela's crude oil, Rosneft Trading has propped up the dictatorial [Nicolás] Maduro, enabling his repression of the Venezuelan people."

Over the past year, U.S. government officials have specifically mentioned Rosneft entities as potential targets of future U.S. sanctions due to Rosneft's continued support of the Maduro regime in Venezuela. For instance, in March 2019, Secretary of State Mike Pompeo stated that "Russia's state-owned oil company...

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