On Wednesday 08 March 2023 the UK Office of Financial Sanctions Implementation (OFSI) issued updated guidance on the UK maritime services prohibition and price cap. The guidance has been updated to:
reflect the price cap on refined Russian oil products and the wind-down period for oil products loaded on ships before 5 February 2023;
set out an amended 'origin of goods' section concerning whether oil products have been substantially processed and co-mingling;
use the term 'provider(s)' rather than 'persons' or 'entity' when describing attestation tiers;
set out an updated example scenario involving the transport of co-mingled refined oil products; and
include the passage:
"For certain Tier 3 Providers, it may not be practical to obtain an attestation for each transaction in line with the requirements… in which case the inclusion of a clause within contractual terms and conditions stating that the unit price of the Russian oil to be supplied or delivered, or being supplied or delivered, is or will be at or below the Price Cap… may be considered sufficient to meet the requirements of the attestation process.
An alternative might, for example, be a clause along the lines of the Lloyds Market Association 3100 clause, which excludes coverage for activity which breaches any sanctions – including, but not limited to, the UK Maritime Services Prohibition and Oil Price Cap."
What is the Russian Oil Price Cap?
The UK and Price Cap Coalition (G7 + Australia) partners have agreed tough and comprehensive sanctions on Russia's most lucrative export: crude oil and refined oil products. The UK have collectively banned the import of Russian oil and oil products into markets, and further ban services including finance, insurance, and shipping from enabling the seaborne transport of Russian oil and oil products globally.
To enable oil to continue to flow in a tight market, a price cap exception to the services ban has been created. This permits services to continue facilitating the transport of Russian oil and product by sea to and between third countries, if sold at or under an agreed price.
The aim of introducing a price cap, the level of which will be determined by coalition countries, is to reduce Russian oil revenues and Russia´s ability to fund its illegal war in Ukraine through inflated global oil prices, whilst enabling oil to continue to flow to the third countries that need it.
When did the Oil Price Cap come into force?
On Tuesday 01 November 2022, the UK Government made the Russia (Sanctions) (EU Exit) (Amendment) (No. 16) Regulations 2022 (the "UK Regulations") which banned the import and maritime transportation of Russian oil and prohibited the provision of services including finance, insurance and shipping relating to maritime transportation. A price cap exception to the services ban was also created.
The maritime services ban and its price cap exception for crude oil came into effect from 05 December 2022 in both Jersey and the UK, with the equivalent restrictions and exception for refined oil products coming into force from 05 February 2023.
The UK Regulations have effect in Jersey by means of the Sanctions and Asset Freezing (Implementation of External Sanctions) (Jersey) Order 2021, which automatically implements all amendments to the UK Russia (Sanctions) (EU Exit) Regulations 2019 in Jersey.
The UK have published updated UK Maritime Services Prohibition and Oil Price Cap Guidance which provides detailed guidance on the amendments made by the UK Regulations.
If you have any questions about this notice, please contact sanctions@gov.je.
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