The final rule makes two key changes to current sanctions on the Russian energy sector. First, the rule prohibits the export of oil refining equipment specified in a new Supplement No. 4 to Russia regardless of the intended end use of the equipment. In other words, the restrictions apply even if exporters do not have “knowledge” that the items will be used in frontier oil and gas applications.

Second, the final rule imposes a heightened license review policy on both the existing and newly-implemented prohibitions. Subject to exceptions, BIS’s policy for reviewing license applications related to these rules is now raised from a “presumption of denial” to a “policy of denial.”

Taken together, the amended rules effectively prohibit the “knowing” export of all items specified under certain Export Control Classification Numbers (ECCNs) for direct or indirect use in frontier oil and gas applications in Russia, and effectively prohibit all exports of equipment specified in the new Supplement No. 4 to Russia, regardless of stated end use.

Exporters of oil and gas equipment, including the fluid handling industry, should carefully review these updates.

1. BIS added the Burmese Ministry of Defence, the Ministry of Home Affairs, Myanmar Economic Corporation, and Myanmar Economic Holdings Limited to the U.S. Entity List. U.S. and non-U.S. companies are prohibited from exporting, reexporting or transferring items subject to the Export Administration regulations (EAR) to these entities without prior approval from BIS. License requests related to the sanctioned entities will be reviewed by BIS under a presumption of denial.
2. BIS added Burma to the list of countries subject to ‘military end use’ and ‘military end user’ (MEU) restrictions under § 744.21 of the EAR. The change will require exporters to acquire a license from BIS before exporting, reexporting, or transferring certain products to military end uses or end users in Burma.
3. BIS limited the number of license exceptions available for Burma by moving the country from Country Group B into the more restrictive Country Group D:1 and from Computer Tier 1 and into Computer Tier 3 under License Exception Computers (APP), § 740.7.
4. BIS will examine all export license requests related to Burma for the risk of diversion to military end users and military end uses pursuant to § 742.4(b)(7) of the EAR. Licenses that are for civil end users and civil end uses will generally be approved, but license applications related to military applications will face a presumption of denial.