06.Jul .2022 11:23

What regime of sanctions applies to Russian oil and what requirements Georgia has to comply?

What regime of sanctions applies to Russian oil and what requirements Georgia has to comply?
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On June 27, Georgia returned the Turkish-flagged ship ESEN KA from Batumi port. On the same day, the Ministry of Finance published a statement, according to which the oil on the tanker was intended for Turkey. According to the official statement the oil on the ship originated from the sanctioned company, which is why Georgia refused to accept the cargo.

For BMG it became known that the cargo was operated by the international logistics company Tepco. who has questions about the decision made by Georgian officials. According to the evaluation of the international legal firm hired by the company, the regime of sanctions that is in force in the European Union does not prohibit Georgian entities, nor Armenian, nor Turkish companies from purchasing Russian oil products.

According to the assessment that BMG obtained, third countries that are not members of the European Union are not prohibited to transit or receive Russian oil products, including the oil products of the company "Rosneft". In addition, the EU itself has an exceptional regime, and until February 5, 2023, specific EU states can purchase Russian oil products.

Review of a law firm that was hired by Tepco reads as follows:

“Summary Memo on E.U., U.K. and U.S. Russia-related Sanctions Regulations re Oil Imports

Existing EU sanctions regulations do not apply to non-EU entities or persons. Accordingly, any non-EU person/entity (including but not limited to Georgian and Turkish entities) may transact with Rosneft or any other non-EU entity or person to purchase, transport and import Rosneft (and in general Russian origin) oil products into Georgia, Armenia and Turkiye, provided that no EU person is involved in such transaction. Likewise, the EU sanctions regulations do not prohibit transportation/forwarding, storage or transit of Rosneft/Russian origin oil products through the territory of Georgia to Armenia and/or Turkiye, as long as no EU person/entity is involved in such activities.

The U.S. sanctions do not restrict the importation of Russian or Rosneft origin oil products into jurisdictions outside the U.S. Consequently, U.S.’s Russia-related sanctions do not apply to and prohibit any purchase, sale, import or handling of any Russian origin oil products into Georgia, Armenia or Turkiye.
Current U.K. sanctions do not generally prohibit or restrict transactions or imports related to Russian or Rosneft-origin oil products.

It was the first time that the 5th Package of EU sanctions regulations introduced a ban on transactions with Rosneft. However, along with some other exceptions transactions, which relate to oil and oil products imports into the EU are specifically excluded from the transaction ban and are therefore allowed. The 6th Package of the EU’s sanctions regulations further set up a deadline for EU import of Russian origin oil products (including of Rosneft origin) in general until February 5, 2023 based on: (a) pre-existing term supply contracts concluded before June 4, 2022 as long as such contracts are notified to the relevant EU authorities until June 24, 2022; and (b) spot contracts for one-off transactions for near-term delivery provided that such spot contracts are notified to the relevant EU authorities within 10 days of their performance,”- reads the memo.