North Sea firms with ties to the US and Canada will be forced to deal with sanctions on Russians as the crisis in the Ukraine escalates, a legal expert has warned.
The US and Canada have imposed strict sanctions on a number of Russians following the country’s annexation of the Crimea, including oligarch billionaire oil trader Gennady Timchenko.
Mr Timchenko, described as “one of the most powerful people in Russia” and worth an estimated £9.3billion, was last week forced to dispose of his interests in Gunvor, the world’s fourth largest oil trading company.
The EU is set bring in its own sanctions as G7 leaders met in The Hague last night to discuss the crisis.
Speculation has arisen that oil and gas giant Total will have to consider its 16% stake in Russian gas producer Novatek, in which Mr Timchenko’s investment firm Volga Resources also has a significant stake.
Total declined to make a statement.
Tom Stocker, a partner at legal firm Pinsent Masons, warned that oil and gas companies in particular would have to be aware of their links with Russian citizens as authorities in the west added to the list of proscribed individuals and companies.
He said: “The regulations say you are not allowed to provide economic resources – assets from which money can be generated – to someone on the lists, and their associated businesses.
“The key question is does that capture just companies they have control over or is it wider than that? My reasoning is it is wider than that.”
He said if Mr Timchenko is also added to the EU ban “then European companies will have to be very careful in their dealings with businesses associated with him”.
North Sea firms with US or Canadian investors or board members will be affected, but the issue also applies to any firm that carries out contracts with North American firms.
“A lot of operators in the North Sea are US-owned and they contract with US companies.
“When they contract with US companies they agree to comply with US sanctions,” said Mr Stocker.
“A lot of companies in the North Sea will be having to comply with US sanctions in any event. The other thing to be aware of is how many companies based in Aberdeen have US directors?
“Those US directors are caught by US sanctions. Therefore, they can’t be involved with transactions with people who are on the US sanctions list,” he added.
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