In a notable sign of enhanced U.S. pressure on Russia concerning the ongoing war in Ukraine, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced significant new sanctions on October 22, 2025, targeting Russia’s energy sector. OFAC’s actions target Russia’s two largest oil companies, Lukoil and Rosneft, which follow on from similar sanctions announced October 15 by the United Kingdom, and on October 23 with the European Union’s adoption of a 19th sanctions package, which includes a prohibition on the purchase and import of Russian liquified natural gas starting April 2026 for short-term contracts and January 1, 2027 for long-term contracts.
New Designations
OFAC’s designations sanction Open Joint Stock Company Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil), as well as their subsidiaries, for “operating or having operated in the energy sector of the Russian Federation economy.”
In addition, all entities owned 50 percent or more, directly or indirectly, by Rosneft and Lukoil are blocked pursuant to E.O. 14024, even if not designated by OFAC. The designations under E.O. 14024 include 34 listed subsidiaries of Lukoil and Rosneft identified as being involved in the Russian energy sector, including entities involved in geological exploration, oil and gas production, and development of oil and gas fields in Russia, among other activities.
General Licenses
As part of its actions, OFAC issued four general licenses, authorizing a limited wind-down period for certain transactions with designated entities, as further detailed below. Other than the ongoing authorizations provided for in General License 124A,1 the authorizations provided for in General Licenses 126, 127, and 128 remain effective only until 12:01 am eastern standard time on November 21, 2025. For any transactions beyond that date within the scope of OFAC’s jurisdiction, a specific license from OFAC would be required.
The licenses do not extend to transactions prohibited by Directive 2 (“Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions”), Directive 4 (“Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation”) under E.O. 14204, or to any transactions that would otherwise be prohibited by OFAC’s Russian Harmful Foreign Activities Sanctions Regulations.
General License 126 – Wind Down of Transactions Involving Rosneft or Lukoil
General License 126 is an umbrella authorization until November 21 for any transactions that are ordinarily incident and necessary to the wind down of transactions involving the designated entities.
General License 127 – Certain Debt, Equity or Derivative Contract Transactions
General License 127 authorizes three types of transactions until November 21 related to debt, equity and derivative contracts. Subject to the terms and conditions of the license, including typical restrictions related to transactions involving blocked persons, this authorization includes transactions:
- Related to the divestment or transfer of debt or equity issued or guaranteed by the designated entities (“Covered Debt or Equity”) to a non-US person;
- Incident and necessary to facilitating, clearing, and settling trades of Covered Debt or Equity placed prior to 4:00 pm eastern daylight time, October 22, 2025;
- Incident and necessary to the wind down of derivative contracts entered into prior to 4:00 p.m. eastern daylight time, October 22, 2025, if either a designated entity is involved or linked to Covered Debt or Equity.
General License 128 – Lukoil Retail Service Stations Located Outside of Russia
General License 128 authorizes transactions ordinarily incident and necessary to the purchase of goods and services from, or the maintenance, operation, or wind down of Lukoil retail service stations located outside of the Russian Federation, until November 21. To qualify, the service station must have been in existence on or before October 22, 2025, in addition to being located outside the Russian Federation.
Conclusion
Persons and entities located in the U.S. and abroad engaged in activities connected to Russia’s energy sector should assess their exposure to the named entities. The authorizations in General License 124A, 126, 127, or 128, should likewise be carefully reviewed for compliance with the terms of that license and aware of the applicable wind down deadline of November 21, 2025.
If you have any questions regarding the matters covered in this e-mail, please contact Bruce Paulsen (212) 574-1533, Brian Maloney (212) 574-1448, or your primary Seward & Kissel attorney.
