Canada: UPDATED: Canada Expands Economic Sanctions And Targets Russian Energy Sector

On February 17, 2015, Canada expanded its already wide-ranging sanctions against Russia and the Ukraine by adding 11 Russian individuals (public officials, persons in Putin's circle and the Chief Executive Officer of Rostec, a large military defence firm) and 26 Ukrainian public officials to the designated persons list. It also added 17 new entities to its sanctions list. These include political parties, battalions, public movements,1 Novo Oplot (a defence firm) and Profaktor TOV (an accounting firm).

Notably, Canada joined the EU and the US in targeting Rosneft, one of the world's largest publicly-traded petroleum companies. That said, Rosneft is not subject to a general asset freeze, which would effectively ban all dealings with the company. Instead, Rosneft is listed on Canada's Schedule 3 debt-financing blacklist. As a result, Canadian entities are prohibited from transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days' maturity in relation to a Rosneft, its property or interests in property. Rosneft joins the only other entity on Canada's Schedule 3 - Novatek (a natural gas producer).

The February 17, 2015 announcement follows Canada's export-control sanctions imposed in December 2014 against the Russian energy sector. As outlined below, in late 2014, Canada followed on the heels of announcements and sanctions imposed by the United States and the European Union, fulfilling a promise made by the Prime Minister in the summer of 20142 to support the US and EU targeting of Russian oil and gas sectors. This was Canada's first use of sector-specific sanctions against Russia.

1. Canadian previous amendments to Russia economic sanctions

On December 19, 2014, Canada enacted the Regulations Amending the Special Economic Measures (Russia) Regulations (SOR/2014-316) (the "Russia Sanctions"). These amending regulations contain new sanctions and clarifications, including a prohibition against new contracts for the export, sale, supply or shipment of certain goods to Russia for use in deep-water, arctic or shale oil exploration and production, along with a prohibition against the provision of services related to these goods.

a. New energy sanctions for contracts entered into after December 19, 2014 

The Russia Sanctions now prohibit any person in Canada, and any Canadian outside Canada, to export, sell, supply or ship any goods listed on Schedule 4 of the Regulations, wherever situated, to Russia or to any person in Russia for use in

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

The Schedule 4 list of sanctioned commodities mirrors the lists established by the US and the EU earlier in 2014. It includes such items as line pipe, drill pipe, casing and tubing, pumps, liquid elevators, drilling and boring tools, and excavation machinery.

The Russia Sanctions also prohibit the provision of financial, technical or other services related to any good whose export, sale, supply or shipment is prohibited. Similarly, they prohibit indirect conduct which may cause, assist or promote any prohibited conduct.

However, these new energy prohibitions do not apply to goods or services if the contract for the export, sale, supply or shipment of the good or for any related service is entered into before December 19.

b. Clarification of debt and equity financing prohibitions

The Russia Sanctions clarify that the new debt financing prohibitions against Schedule 2 and 3 listed persons (i.e. persons to whom the prohibitions against new debt financing apply) include the following types of new debt transactions: 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 equity financing prohibition in the Russia Sanctions has also been amended. The original capital funding language has been clarified and now prohibits any financing or other dealings in new securities, including shares or any other ownership interest in relation to the persons listed in Schedule 2.

c. Additional Russian and Ukrainian individuals sanctioned

Eleven additional Russian separatists have been added to the Russia Sanctions.

Canada also issued the Regulations Amending the Special Economic Measures (Ukraine) Regulations (SOR/2014-317) (the "Ukraine Sanctions") on December 19, 2014 to sanction an additional 9 separatist leaders in the Ukraine, all of whom have been previously listed by the EU. These amendments to the Ukraine Sanctions do not impose any other prohibitions.

2. United States amendments to Russian economic sanctions3

a. Clarification of oil sector prohibition

The US Office of Foreign Assets Control ("OFAC") released new FAQs on December 11, 2014 clarifying the oil sector prohibitions in Directive 4. The prohibitions do not cover 1) the provision of goods, services and technology relating to the refining of oil or other dealings involving oil that has been extracted from a deepwater, Arctic offshore, or shale project and transported off a field production site is not prohibited; and 2) arctic offshore projects do not include refineries which process arctic offshore oil, but are limited to drilling operations located above the Arctic Circle. Canada has not provided guidance as to whether it has established a similar exemption in its Russia Sanctions.

b. US economic embargo against Crimea and additional blocked persons

On December 19, 2014 the United States issued a new Executive Order to tighten its economic embargo against Crimea (which excludes the sale of agricultural commodities, medicine, and medical supplies to Crimea pursuant to General License 4) by prohibiting the following types of conduct:

  • new investment in the Crimea region of Ukraine by US persons;
  • the importation of any goods, services, or technology from the Crimea region of Ukraine into the United States; 
  • the exportation, re-exportation, sale, or supply of any goods, services, or technology from the United States to the Crimea region of Ukraine; and
  • any approval, financing, facilitation, or guarantee by a US person of any such transaction by a foreign person.

Canada has not imposed restrictions akin these US economic embargo measures against the Crimea region.

The US also imposed sanctions on December 19, 2014 against 24 additional Ukrainian and Russian separatists and the militias or entities they lead or support, including Marshall Capital Partners (a Russian equity investment group) and Profaktor, Tov (a Ukrainian accounting, auditing and bookkeeping firm). No extractive sector entities were named in this round of US sanctions.

3. European Union amendments to Russia economic sanctions4

a. Economic embargo against Crimea

On December 18, 2014 the European Union issued Council Regulation No 1351/2014, effective December 20, 2014, to broaden its economic embargo against Crimea and issued lists of sanctioned goods (in Annex II) and Crimean ports (in Annex III).

This new EU regulation basically prohibits all foreign investments and related services in Crimea or Sevastopol as well as the sale, supply, transfer or export of Annex II goods and technologies suited for use in the following sectors in Crimea or Sevastopol: energy; prospecting, exploration and production of oil, gas and minerals; transport; and telecommunications. It prohibits direct or indirect technical or financial assistance, brokering services, provision, manufacture, maintenance, or financing of the goods and technology listed in Annex II. Similarly it prohibits technical assistance, brokering, construction or engineering services directly relating to infrastructure in Crimea or Sevastopol in the above-listed sectors. These prohibitions effectively broaden the former export prohibition on goods and technology in the sectors of energy and exploitation of oil, gas and minerals, transport, telecommunications. However, these prohibitions do not apply to the execution of an obligation until March 21, 2015 arising from contracts concluded before December 20, 2014.

As mentioned above, Canada has not imposed measures expressly targeting the Crimea nor Sevastopol regions.

b. Guidance on sectoral sanctions

On December 16, 2014, the EU released a 26 frequently asked questions and answers (FAQs) regarding the sanctions it imposed on July 31, 20145 which consist of restrictions on access to certain sensitive technologies particularly in the oil sector, an export ban for dual use goods for military end use and end users, and measures aimed at limiting access to EU capital markets for Russian state-owned financial institutions. This guidance clarifies both the financial assistance measures and the financial service measures. For example, FAQ 1 clarifies that the EU's prohibition on dual-use exports to Russia for military end-users or military end-use also applies to "payment services and issuance of letters of guarantees/credit" linked to transactions involving these prohibited exports. None of the oil sector prohibitions are addressed in this guidance.

c. February 2015 sanctions

On February 9, 2015, the European Union issued Council Implementing Regulation (EU) 2015/240, effective February 16, 2015. This Council Regulation imposed sanctions on 19 public officials and 9 entities, all of which are either separatist battalions or public movements. These amendments were largely mirrored in the February 2015 Canadian sanctions.


The US, EU and Canadian sanctions introduced on December 18-20, 2014 are extensive and came without much warning. Canada's amendments bring it into general alignment with the US and EU effort to target the oil and gas sector as a key area. Not surprisingly, Russia has indicated an intention to introduce retaliatory measures.6 Companies involved in cross-border trade of goods or services as well as investment and financing transactions will need to monitor developments in order to ensure ongoing compliance with increasingly complex and technical levels of restrictions. As noted in our previous bulletins,7 the consequence for not doing so can be severe.


1 Although "public movement" is not defined, the listed public movements are sanctioned for having provided assistance to armed separatist groups.

2 Prime Minister's Office, "Statement by the Prime Minister of Canada announcing additional sanctions" (6 August 2014), online:

3 The general information on US sanctions is provided only in summary form as context for understanding how Canada's approach to sanctions of Russia and the Ukraine has been evolving.

4 The general information on EU sanctions is provided only in summary form as context for understanding how Canada's approach to sanctions of Russia and the Ukraine has been evolving.

5 Through the adoption of Council Regulation (EU) No. 833/2014, as amended on September 8, 2014 by Council Regulation (EU) No 960/2014 and on December 4, 2014 by Council Regulation (EU) No 1290/2014.

6 "Russia to consider possible response to US, Canada sanctions — Kremlin aide" (22 December 2014), ITAR-TASS, online:

7 Martin Masse and Monica Podgorny, " Canada, US and the EU Expand Their Lists of Economic Sanctions against Russia and the Ukraine" McMillan LLP (July 2014) and Martin Masse and Monica Podgorny, " Staying Out of the Crosshairs – Keeping On Top of Russia Related Economic Sanctions" McMillan LLP (November 2014).

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2015

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.

Martin G. Masse
Monica Podgorny
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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