International Law Advisory - White House Issues New Executive Order Blocking Sudanese Property and Restricting Petroleum-Related Transactions

On October 13, the President issued an Executive Order relating to Sudan. The Order was issued in part to take into account the Darfur Peace and Accountability Act, which was also signed by the President on October 13.  Pursuant to the Order, and except as otherwise provided for by law or licenses issued pursuant to the Order, all property and interests in property of the Government of Sudan that are in the United States or that come within the United States or that come within the possession of control of U.S. persons, including their overseas branches, are blocked and may not be transferred, paid, exported, withdrawn or otherwise dealt with.  In addition, and except as otherwise provided by law or licenses issued pursuant to the Order, notwithstanding any contract entered into or any license or permit granted prior to the effective date of the Order, all transactions by U.S. persons related to the petroleum or petrochemical industries in Sudan, including, but not limited to, oilfield services and oil or gas pipelines, are prohibited. In essence, these two elements of the Executive Order are consistent with the restrictions that were in effect under the original 1997 Executive Order that first imposed sanctions on Sudan (see Executive order 13067 available here). 

However, the new Order removes the applicability of in the prohibitions set forth in section 2 of Executive Order 13067 to activities or transactions with respect to Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, or marginalized areas in and around Khartoum, provided that the activities or transactions do not involve any property or interests in property of the Government of Sudan.  It goes on to state that the Secretary of State, after consulting with the Secretary of Treasury, will provide a definition for the above-listed areas.  In addition, the new Order re-defines the term “Government of Sudan,” to exclude “the regional government of Southern Sudan.”

In practical effect, the new Order’s  treatment of Southern Sudan means that so long as activities and transactions in these areas do not involve the Government of Sudan or the petroleum and petrochemical industries, U.S. sanctions no longer apply to the above-listed areas,  We understand from OFAC officials that the petroleum and petrochemical prohibitions are intended to apply throughout Sudan (including Darfur and Southern Sudan), based on the understanding or belief that the Government of Sudan has an interest in all aspects of the petroleum industry in all areas of the country.

We are continuing to monitor the implementation of the Executive Order, including the possible issuance of new regulations.  Should you have you any questions regarding Sudan sanctions, please contact Ed Krauland at (202) 429-8083 or Andy Irwin at (202) 429-8177.