Russian Federation: New Canadian Sanctions Target Russian Oil Exploration And Production Activity

On December 19, 2014, Canada significantly expanded its economic sanctions against Russia by imposing restrictions on the supply of certain goods and related technical, financial and other services for use in offshore, Arctic or shale oil exploration or production.

This represents a major escalation in economic sanctions as it is the first time that Canada has targeted a range of economic activities in Russia rather than just imposing sanctions against listed entities and individuals. It follows the Harper government's announcement on August 6, 2014, that it would impose export restrictions on technologies used in Russia's oil exploration and extraction sector in parallel with Canada's allies.

These latest amendments also add 20 Russian and Ukrainian individuals to the lists of designated persons with whom most transactions are prohibited. Amendments have also been made to the existing debt and equity financing restrictions against certain listed entities, clarifying the scope of those measures.

New Sanctions Measures

With the intention of complementing existing energy sector restrictions imposed by the United States and the European Union, Canada has amended its Special Economic Measures (Russia) Regulations (Russia Regulations) to prohibit a range of transactions involving Russian oil exploration and production.

New section 3.3 of the Russia Regulations now prohibits persons in Canada and any Canadian outside Canada from exporting, selling, supplying or shipping any listed goods, wherever situated, to Russia or to any person in Russia for use in any of the following activities:

  • offshore oil exploration or production at a depth greater than 500 metres;
  • oil exploration or production in the Arctic; or
  • shale oil exploration or production.

The new measures also prohibit the provision to Russia or to any person in Russia of any financial, technical or other services related to such prohibited goods.

A new Schedule 4 has been added to the Russia Regulations which identifies the goods subject to this new ban along with their Harmonized System code (as published by the World Customs Organization). The goods fall within various codes under Chapters 73, 82, 84, 87 and 89.

Prohibited goods include certain line pipe, drill pipe, tubing, casing, rock-drilling and earth-boring tools; pumps, liquid elevators, boring and sinking machinery, mobile drilling derricks, floating or submersible drilling or production platforms, fire-floats, lightships and floating docks or cranes.

Also listed in Schedule 4 are parts for a wide range of equipment and machinery that could be used for the three activities identified above, including parts for the following: lifting, handling, loading or unloading machinery; derricks, cranes, mobile lifting frames and other lifting machinery; self-propelled bulldozers, scrapers, graders, levellers, shovel loaders and tamping machines; other moving, grading, scraping, levelling, excavating and extracting machinery; and hydraulic or self-propelled boring or sinking machinery.

The new oil exploration and production measures also contain a grandfathering provision. The prohibitions do not apply if a contract for the export, sale, supply or shipment of the good or for any related service was entered into before the day on which the measure came into force: December 19, 2014.

It is important to note that these measures have been implemented under Canada's economic sanctions regime rather than its export controls regime. Accordingly, the restrictions apply not just to the supply of the goods, services and technology from Canada but also to their supply from anywhere in the world.

Changes to Debt and Equity Financing Prohibitions

Canada has also amended the debt and equity financing restrictions applicable to certain designated persons listed in Schedules 2 and 3 of the Russia Regulations. Schedule 2 currently lists the following:

  • Gazprombank OAO
  • VEB
  • VTB Bank OAO
  • Bank of Moscow
  • Russian Agricultural Bank (Rosselkhozbank)
  • Sberbank

OAO Novatek is presently the only person listed in Schedule 3.

Prohibited Debt Financing Activity

The debt financing restrictions, initially brought into force on July 24, 2014, prohibited any person in Canada and any Canadian outside Canada from transacting in, providing or otherwise dealing in a loan, bond or debenture in relation to the Schedule 2 or 3 listed persons or their property. These have been amended to provide a more detailed description of the prohibited activities.

Now the measure prohibits transacting in, providing financing for or otherwise dealing in "new debt including bonds, loans, debentures, extensions of credit, loan guarantees, letters of credit, bank drafts, bankers' acceptances, discount notes, treasury bills, commercial paper and other similar instruments." The restrictions continue to apply to debt of more than 30 days' maturity for Schedule 2 entities and more than 90 days' maturity for Schedule 3 entities.

The amendments also confirm that the debt financing prohibitions do not apply if the above-described activities were undertaken before the designated person was listed in Schedule 2 or 3.

Prohibited Equity Financing Activity

The equity financing restrictions, also imposed on July 24, 2014, originally prohibited any person in Canada and any Canadian outside Canada from transacting in, providing or otherwise dealing in capital funding through the transaction of shares in exchange for an ownership interest in relation to the Schedule 2 designated persons or their property.

The amended provision now prohibits transacting in, providing financing for or otherwise dealing in "new securities, including shares or any other ownership interest," in relation to the Schedule 2 designated persons or their property.

Further, there is a grandfathering exception similar to the one provided for the debt financing restrictions: i.e., for activities that were undertaken before the designated person was listed in Schedule 2.

New Designated Persons

Persons in Canada and Canadians outside Canada are prohibited from engaging in a broad range of activities involving individuals and entities listed in Schedule 1 of the Russia Regulations. This includes prohibitions against the following:

  • dealing in any property, wherever situated, held by or on behalf of a Schedule 1 designated person;
  • entering into or facilitating, directly or indirectly, any transaction related to such a dealing;
  • providing any financial or other related service in respect of such a dealing;
  • making any goods, wherever situated, available to a Schedule 1 designated person; or
  • providing any financial or related service to or for the benefit of a Schedule 1 designated person.

Further, all persons in Canada and Canadians outside Canada are required to immediately report to the Royal Canadian Mounted Police if they are in possession or control of property they have reason to believe is owned or controlled, directly or indirectly, by a designated person or by an entity owned or controlled by a designated person or if they have any information about a transaction or proposed transaction in respect of such property.

Federally and provincially regulated financial institutions and financial services companies are required to determine on a continuing basis whether they are in possession or control of listed persons' property. For federally regulated financial institutions, the Office of the Superintendent of Financial Institutions has noted that it expects customer records to be searched at least on a weekly basis and more often if necessary.

The December 19, 2014, amendments add 11 Russian individuals to the Schedule 1 list under the Russia Regulations. The Special Economic Measures (Ukraine) Regulations contain similar prohibitions and have also been amended to include an additional 9 Ukrainian individuals as designated persons.

Impact on Canadians Doing Business Abroad

Canadian firms operating in or doing business with the oil exploration and production sectors should be especially vigilant and ensure effective internal controls are in place to address compliance with these broad economic sanctions measures. These include specific procedures for conducting due diligence on transactions which have or could have a connection to Russia or to offshore, Arctic or shale oil exploration or production.

Further, all Canadians doing business abroad in any sector and in any country should ensure that their compliance measures are fully up to date to reflect these latest changes in the lists of individuals and entities with whom they are prohibited from engaging in various activities. There are now 219 such designated persons under Canada's Russia- and Ukraine-related sanctions measures. Presently, Canada has blacklisted well over 2,000 individuals, entities and associations across all of its economic sanctions programs.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions