June 10, 2014
In response to the situation in Ukraine, the President of the United States has issued Executive Orders 13660, 13661 and 13662 authorizing sanctions upon: (1) individuals undermining democratic processes, threatening peace and security and misappropriating state assets of Ukraine; (2) Russian government officials and members of the inner circle; and (3) sectors of the Russian economy. However despite U.S. efforts to isolate Russia, many major western oil companies are boldly moving ahead to expand investments in Russia now estimated to exceed $35 billion. Significant new deals are:
- ExxonMobil and Rosneft agreed to develop “tight oil” reserves in Western Siberia in an effort to replicate the U.S. shale boom using ExxonMobil’s technology currently used in unconventional oil and gas formations in North America
- ExxonMobil and Rosneft are moving forward with a $3.2 billion agreement to explore and develop Arctic oil reservoirs in the Laptev and Chukchi seas. These projects target the oil-rich Anisinsk-Novosibirsk and Ust-Oleneksk fields in the Laptev Sea shelf zone, as well as the North-Wrangel-2 and South-Chukchi shelf reservoirs.
- BP signed a $300 million preliminary agreement with Rosneft to study shale oil deposits in the Volga Valley and Ural Mountains.
- Total signed a deal with Lukoil to explore a 1,000 square mile block in western Siberia for shale oil.
- Shell has agreed with Gazprom to expand the Sakhalin-2 LNG plant which produces 10 million tonnes of LNG per year.
Marks & Sokolov attorneys provide advice on structuring contracts and protecting interests in the face of possible additional economic sanctions on Russia; and counsel companies interacting with sanctions targets. Any company, foreign or domestic, doing or planning to do business with entities or countries subject to U.S. trade sanctions – such as the Russian Federation – should seek guidance regarding compliance. Marks & Sokolov attorneys can assist with compliance by providing:
– A review of contracts, including an examination of parties and their beneficial owners;
– Determination whether the sanctions apply and prohibit contract performance;
– Advice regarding potential liability to contract parties;
– Advice regarding notification of termination of contracts and the disposition of deposits;
– Advice about possible defenses against liability such as justified non-performance due to force majeure circumstances and regulatory prohibition.
Marks & Sokolov, LLC has extensive experience representing multinational clients in the United States and Russia. For more information please contact, in the United States: Bruce Marks (firstname.lastname@example.org) or Thomas Sullivan (email@example.com) at (215) 569-8901; or in Russia, Sergey Sokolov (firstname.lastname@example.org) or Derek Bloom (email@example.com) at +7-495-626-0606.