Syria Sanctions - Crude Oil and Petroleum Products

Syria – Financial Regulation 878

To date international measures targeting the Syrian regime have been limited to an asset freeze imposed on listed individuals. The new Regulation which entered into force on 2 September contains new measures targeting the importation, financing, insurance and reinsurance of crude oil or petroleum products into the EU if they originate in Syria.

As such from 2 September it is unlawful for the Association to provide P&I or other insurances to a vessel engaged in such trade subject to Article 3b below.

The relevant sections to the Regulation are set out below and a link is available to the full text from the HMT circular which may be accessed from the link below.

‘Article 3a

It shall be prohibited:

(a)   to import crude oil or petroleum products into the Union if they:

(i) originate in Syria; or

(ii) have been exported from Syria;

(b)   to purchase crude oil or petroleum products which are located in or which originated in Syria;

(c)    to transport crude oil or petroleum products if they originate in Syria, or are being exported from Syria to any other country;

(d)   to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions set out in points (a), (b) and (c); and

(e)    to participate, knowingly and intentionally, in activities whose object or effect is, directly or indirectly, to circumvent the prohibitions in point (a), (b), (c) or (d).

Article 3b

The prohibitions in Article 3a shall not apply to:

(a)   the execution, on or prior to 15 November 2011, of an obligation arising from a contract concluded before 2 September 2011, provided that the natural or legal person, entity or body seeking to perform the obligation concerned has notified, at least 7 working days in advance, the activity or transaction to the competent authority of the Member State in which it is established, as identified on the websites listed in Annex III; or

(b)   the purchase of crude oil or petroleum products which had been exported from Syria prior to 2 September 2011, or, where the export was made pursuant to point (a), on or prior to 15 November 2011.’;

This Regulation also bans the transportation of Syrian petroleum products (Art 39a (c)).

This is a new development for the EU as it seeks to exercise extra territorial control over shipowners who are trading outside the EU but nonetheless subject to its jurisdiction e.g. a Greek flagged vessel trading between Syria and China. Such trade and the insurance of it is now unlawful.

In addition those parties subject to an asset freeze in Syria have been extended and it is important where you are trading with Syria to check all the parties engaged in such a trade to ensure that they are not designated by the EU.

The notice can be found at the following URL address:

http://webarchive.nationalarchives.gov.uk/20130129110402/http://www.hm-treasury.gov.uk/d/fin_sanc_reg_878_050911.pdf

Any Members currently involved in crude oil or petroleum products transportation from Syria to the EU should contact Mark Robinson or Mike Salthouse for advice immediately.