UK sanctions Rosneft and Lukoil in latest targeting of Russian energy sector

The two energy companies, among Russia’s largest oil producers, have been hit with financial sanctions restrictions. This follows January’s listing of oil majors Gazprom Neft and Surgutneftegas.

The ban comes amid a raft of 90 new sanctions announced by the UK Government, which also includes four oil terminals in China.

Stacy Keen, a sanctions expert with Pinsent Masons, said: “UK financial sanctions prohibit almost all dealings with these entities, with a breach of the prohibition amounting to a criminal offence.  The test for the commission of a criminal offence is knowledge or reasonable cause to suspect a dealing with the financial sanctions target.  Civil penalties can be enforced on a strict liability basis, meaning there is no need to demonstrate knowledge / suspicion of a contravention.”

“The designation of Rosneft and Lukoil have broader ramifications for their respective groups. The financial sanctions prohibitions also extend to entities that are, directly or indirectly, owned or controlled Rosneft or Lukoil.

“To fully assess financial sanctions risk, due diligence is required to establish if counterparties and others involved in an activity are owned or controlled by Rosneft, Lukoil or any other UK financial sanctions target.”

Edward James, a compliance expert with Pinsent Masons, added: “Compliance with UK financial sanctions is particularly tricky as ownership and control are often opaque and not straightforward to determine”.

“Simply screening the names of counterparties on databases may not be enough to determine if they are owned or controlled by sanctions targets such as Rosneft or Lukoil. Energy companies should ensure that their sanctions compliance programmes are suitably designed to understand the ownership and control of higher risk counterparties.”

The UK has issued a general licence authorising wind down activities until 28 November 2025 subject to compliance with its conditions.

A total of 44 ‘shadow fleet’ tankers which have been transporting Russian oil, and Nayara Energy – a Russian-owned refinery in India - have also been sanctioned.

“We are introducing targeted sanctions against the two biggest oil companies in Russia, Lukoil and Rosneft," Rachel Reeves, UK chancellor of the exchequer, told the media ahead of a G7 event in the US.

"At the same time, we are ramping up pressure on companies in third countries, including India and China, that continue to facilitate getting Russia oil onto global markets."

China said it had lodged a protest over the UK’s sanctions against its refineries, telling Reuters it opposed unilateral sanctions without a basis in international law or approval by the United Nations.