Australia has joined the G7 in implementing two price caps on Russian refined petroleum products. On 4 February 2023, G7 countries plus Australia agreed to price caps of USD 100 per barrel for high value and USD 45 per barrel for low value Russian-origin refined petroleum products.

The price caps aim to support stability in global energy markets while reducing the revenue Russia receives from refined petroleum products. This forms part of a comprehensive suite of measures Australia has introduced to impose costs on Russia for its illegal and immoral invasion of Ukraine.

Current sanctions

Australia has prohibited the import, purchase or transport of Russian oil, gas, refined petroleum products and coal since 25 April 2022.

Under Australian sanctions law:

• the import, purchase or transport of an import sanctioned good; and
• the provision of financial assistance or a financial service (referred to as Relevant Services) that assists with, or is provided in relation to, a sanctioned import

are prohibited without a sanctions permit.

Financial service is defined in regulation 3 of the Autonomous Sanctions Regulations 2011 (the Regulations) and includes:

• (a) an investment service; and
• (b) a service providing financial advice; and
• (c) a brokering service; and
• (d) insurance; and
• (e) reinsurance; and
• (f) financial derivatives.

A sanctioned import for Russia includes the import, purchase or transport of 'import sanctioned goods' if the goods are exported from Russia (or a part of Russia) or the goods originate in Russia (regulation 4A of the Regulations). Import sanctioned goods for Russia include:

• 'petroleum oils and oils obtained from bituminous minerals, crude' (Tariff Code 2709) as per item 9 of Schedule 1 of the Autonomous Sanctions (Import Sanctioned Goods - Russia) Designation 2022); and
• ‘petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils' (Tariff Code 2710) as per item 10 of Schedule 1 of the Autonomous Sanctions (Import Sanctioned Goods - Russia) Designation 2022).

On 4 December 2022, the Minister for Foreign Affairs issued a general sanctions permit authorising the provision of Relevant Services if they assist with, or are provided in relation to, the import, purchase or transport of Russian oil and that oil was purchased at or below the price cap agreed between the G7 countries and Australia (USD 60 per barrel).

Implementation of the price cap on Russian Refined Petroleum Products

On 15 February 2023, the Minister for Foreign Affairs issued two general permits that each implement different elements of the price caps of USD 100 per barrel for high value and USD 45 per barrel for low value Russian-origin refined petroleum products.

• One permit authorises the provision of Relevant Services if they assist with, or are provided in relation to, the import, purchase or transport of Russian refined petroleum products and those products were purchased at or below the relevant price caps.
• The other permit authorises the shipping of Russian refined petroleum products to countries other than Australia if those products were purchased at or below the relevant price caps.

Russian refined petroleum products means petroleum oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations; waste oils (Tariff Code 2710), designated as import sanctioned goods for Russia by item 10 of Schedule 1 to the Autonomous Sanctions (Import Sanctioned Goods—Russia) Designation 2022, that are exported from, or originate in, Russia or part of Russia.

High Value Russian refined petroleum products, subject to the price cap of USD 100 per barrel, include gasoline; crudes, topped or enriched (including vacuum gas oil); diesel; kerosene for use as fuel in aircraft; heating oil; kerosene; and biodiesel. Specifically, the permits define a High Value Russian refined petroleum product as a Russian refined petroleum product with a tariff code listed in the Annexure to the permit. These are codes used in the ‘Combined Australian Customs Tariff Nomenclature and Statistical Classification’ published by the Australian Border Force (as at 25 April 2022) as follows:

• 2710.12.61
• 2710.12.62
• 2710.12.69
• 2710.19.14
• 2710.19.16
• 2710.19.22
• 2710.19.28
• 2710.19.40
• 2710.19.51
• 2710.19.52
• 2710.20.00

The permit includes detailed descriptions of these codes for ease of reference.

The permits define a Low Value Russian refined petroleum product, subject to the price cap of USD 45 per barrel, as a Russian refined petroleum product that is not a High Value Russian refined petroleum product.

For the purpose of determining whether the provision of Relevant Services or shipping is authorised by the permits, the date for determining whether the price per barrel of the Russian refined petroleum product is or was below the price cap is the date of the most recent Covered Transaction.

Covered Transactions are any transaction for the sale of Russian refined petroleum products up until the Russian refined petroleum products first passes through the customs control of a country other than Russia.

As outlined above, these permits pertain only to the provision of Relevant Services relating to Russian refined petroleum products and the transportation by ship of Russian refined petroleum products to countries other than Australia, where those products were purchased at or under the relevant price caps. The permits do not authorise the importation, purchase or transport (other than by ship) of Russian refined petroleum products.

Update to the implementation of the price cap on Russian Oil 

The Minister for Foreign Affairs has now also issued a general permit authorising the shipping of Russian oil to countries other than Australia if that oil was purchased at or below the price cap of USD 60 per barrel. This permit operates in addition to the permit issued on 4 December 2022, which authorised the provision of Relevant Services if they assist with, or are provided in relation to, the import, purchase or transport of Russian oil and that oil was purchased at or below the relevant price cap.

Russian oil means petroleum oils and oils obtained from bituminous minerals, crude (Tariff Code 2709), designated as import sanctioned goods for Russia by item 9 of Schedule 1 to the Autonomous Sanctions (Import Sanctioned Goods—Russia) Designation 2022, that are exported from, or originate in, Russia or part of Russia.

For the purpose of determining whether the shipping is authorised by the permit, the date for determining whether the price per barrel of the Russian oil is or was below the price cap is the date of the most recent Covered Transaction.

Covered Transactions are any transaction for the sale of Russian oil up until the Russian oil first passes through the customs control of a country other Russia.

As outlined above, this permit pertains only to the transportation by ship of Russian oil to countries other than Australia, where that oil was purchased at or under the relevant price cap. The permit does not authorise the importation, purchase or transport (other than by ship) of Russian oil.

Using the permits

If you are an Australian or Australian body corporate seeking to rely on one of these permits to engage in these services, please contact the Australian Sanctions Office (through our online portal, Pax) to request a copy of the relevant permit.

Details of sanctions that Australia imposes against Russia are available on the Russia sanctions page of the DFAT website.