[co-author: Daniel Steinfeld]
On October 22, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced significant new sanctions for Russia’s energy sector, designating Rosneft Oil Company (Rosneft) and Lukoil OAO (Lukoil) under Executive Order 14024 as Specially Designated Nationals (SDNs), along with dozens of directly named subsidiaries.
These designations prohibit transactions with and services related to Rosneft, Lukoil, any entity that they or other SDNs own 50 percent or more, or any property in which such entities have an interest, directly or indirectly, for U.S. persons and where U.S. primary sanctions jurisdiction otherwise applies.
These designations follow the United Kingdom’s imposition of asset freezes on both Rosneft and Lukoil on October 15, 2025. Certain wind-downs remain available under UK law. The EU also approved its 19th sanctions package on Russia on October 22, 2025.
Limited Wind-Down Authorizations Available
To mitigate immediate disruption, OFAC issued several general licenses (GLs) authorizing limited, time-bound transactions involving the designated entities. Among other things, these GLs authorize wind-down of transactions involving Rosneft, Lukoil, or their 50 percent-owned subsidiaries until 12:01 a.m. EST on November 21, 2025. Specifically, OFAC issued the following four GLs:
- GL 124A: Authorizes certain transactions involving the Caspian Pipeline Consortium and Tengizchevroil projects.
- GL 126: Authorizes transactions ordinarily incident and necessary to wind down of dealings involving the newly designated entities.
- GL 127: Authorizes transactions ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity issued or guaranteed by the newly designated entities.
- GL 128: Authorizes transactions ordinarily incident and necessary to the purchase of goods or services from, and the maintenance, operation, or wind-down of, Lukoil retail service stations located outside Russia.
Secondary Sanctions Risk for Non-U.S. Parties
In its announcement of sanctions for Rosneft and Lukoil, the Treasury Department raised secondary sanctions risk, stating that “foreign financial institutions that conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base, including any persons blocked pursuant to E.O. 14024, run the risk of being sanctioned by OFAC.” Under Executive Order 14024, OFAC may impose sanctions on foreign persons that provide material support to, or conduct significant transactions persons blocked under its authority. Executive Order 14114 further authorizes OFAC to target foreign financial institutions who conduct or facilitate significant transactions involving Russia’s military-industrial base. OFAC considers “Russia’s military-industrial base” to include all persons blocked under Executive Order 14024. Thus, secondary sanctions risk may raise due diligence questions, even outside of the United States, for financial institutions, energy traders, insurers, and logistics providers when engaging in any activity that could involve Rosneft, Lukoil, or their affiliates.
Export Control Implications
In addition to OFAC restrictions, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) imposes export control requirements under the Export Administration Regulations (EAR). Under 15 C.F.R. § 744.8, a BIS license is required for the export, reexport, or in-country transfer of any item subject to the EAR when a blocked party is a participant in the transaction. This includes both items on the Commerce Control List and EAR99 items. Entities choosing to continue interacting with Lukoil, Rosneft, or their 50% or greater owned subsidiaries should determine whether such transactions involve items subject to the EAR before proceeding.
For more on the latest BIS “Affiliates Rule” see here.
Unless a transaction is authorized by OFAC under a general or specific license (i.e., by virtue of Rosneft, Lukoil, and its affiliates being designated as an SDN), a separate BIS authorization is required.
Next Steps
The designation of Rosneft and Lukoil are the first designations by President Trump under Executive Order 14024. As the Russia-Ukraine conflict continues to evolve rapidly, further regulatory developments in the near future are possible.
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