Changes to the attestation requirements under the UK Oil Price Cap General Licence

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Changes to the attestation requirements under the UK Oil Price Cap General Licence

Changes to the attestation requirements under the UK Oil Price Cap General Licence

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February 29, 2024

On 19 February 2024, the UK and G7+ Coalition partners implemented significant changes to the Oil Price Cap attestation model, strengthening the compliance regime.

We anticipate that the more stringent attestation requirements will materially increase the administrative burden for providers relying on the Oil Price Cap General Licence (OPC GL). Providers should prioritise familiarising themselves with the new requirements and ensure that they have allocated adequate resources to manage the increased number of attestation requests.

All providers, including those who do not fall within any of the tiers specified in the OPC GL, should be aware of the conditions of the OPC GL as certain obligations also apply to a wider range of providers who fall within the definition of an "Involved Person".

The ban on maritime transportation of Russian oil

The UK Russia (Sanctions) (EU Exit) Regulations 2019 (UK Russia Regulations) prohibit the maritime transportation of Russian oil (from 5 December 2022) and refined oil products (from 5 February 2023) from a place in Russia to a third country, or from one third country to another (i.e. countries that are neither the UK, the Isle of Man or Russia).¹ The ban applies to products with HS headings 2709 and 2710.

Further, there is also a prohibition on the provision of associated financial services, funds or brokering services that facilitate the maritime transportation of Russian oil or refined products.²

The UK and G7+ Coalition partners have implemented the OPC GL that permits the supply and delivery of Russian oil by ship from a place in Russia to a third country, or from one third country to another, provided that the unit price of the Russian oil concerned is at or below the applicable price cap. The OPC GL also applies to the provision of associated services.

Each provider that intends to rely on the OPC GL should ensure that it complies with the attestation requirements, record-keeping and reporting obligations applicable to its tier. The different tiers and the obligations applicable to them are set out in the OPC GL Guidance.

In addition to the OPC GL Guidance, providers may find the new financial sanctions guidance for maritime shipping helpful (issued by OFSI on 28 February 2024). This guidance provides "good practice recommendations" on due diligence measures and a helpful overview of common sanctions evasion practices for those operating in the maritime shipping sector.

Changes to the tiers and to the attestation model

From 19 February 2024, Tier 3 will be split into Tier 3A and Tier 3B as follows:

Tier 3A	Tier 3B
P&I clubs Hull and machinery insurers Cargo insurers Insurance brokers Ship owners Ship management companies	Reinsurers Financial institutions providing general financing facilities (FIs providing transaction-based financing remain in Tier 2)

Further, from 19 February 2024, more stringent attestation requirements will apply to Tier 1, Tier 2 and Tier 3A entities. There are no changes to the attestation requirements applicable to Tier 3B providers or Involved Persons (who are not Tier 1, Tier 2, Tier 3A or Tier 3B providers).

The two key changes to the attestation requirements are:

from 19 February 2024, attestations must be provided on a per-voyage basis. Annual attestations are no longer acceptable (per-voyage attestations requirement does not apply to Tier 3B providers or Involved Persons (who are not Tier 1, Tier 2, Tier 3A or Tier 3B providers)); and
itemised price information for ancillary costs must be recorded by Tier 1 providers (and those Tier 2 providers with access to price information) and then provided to other Tier 1, Tier 2 and Tier 3A contractual counterparties upon request (Tier 3B providers or Involved Persons (who are not Tier 1, Tier 2, Tier 3A or Tier 3B providers) do not need to obtain the itemised price information from their counterparties).

The attestations must be provided prior to the oil being lifted/loaded, or prior to the effective date of the contract (whichever is earlier), and for every additional voyage occurring under a single contract prior to the lifting/loading of the oil.

According to the OPC GL Guidance, "a voyage is defined as the period between the oil and/or oil products being loaded onto a ship and when it is discharged. As such, each time a vessel sets sail from a port during the course of its journey to the final destination counts as a separate voyage if, during the course of the port stop, oil is discharged". Similarly, if a ship transfers the oil/oil product to another ship before reaching its destination (ship-to-ship transfer), this constitutes two separate voyages.

The itemised ancillary cost information must be retained by Tier 1 providers (and Tier 2 providers where applicable) and shared with their Tier 1, 2 or 3A contractual counterparties upon request within 28 days of such request. The specific information that must be included in the cost information depends on the nature of the relevant service/transaction. The OPC GL Guidance provides the following examples as costs that may need to be recorded:

Type of service/transaction	Ancillary costs to be recorded
CIF contracts	Costs: Export licences, inspection of products, fees for shipping and loading the goods at the seller's port, packaging costs, fees for customs clearance, duty and taxes, port dues at the point of loading/export, and port service charges at the point of loading/export.
	Insurance: Cost of insuring the shipment up until the buyer's goods have been delivered at the port of destination.
	Freight: Cost of shipping the freight via sea or waterway from the seller's port to the buyer's port of destination.
	Other costs: Any other costs that demonstrate compliance with the general licence and provide assurance that the transaction is being conducted legally.
FOB contracts	Costs: Costs of packaging the exported items, any charges for loading the product onto transport and delivering the goods to the seller's port, export taxes, customs duty and costs, and any transfer, handling and loading charges associated with loading the product onto the ship.

In addition to the attestation requirements, companies should be mindful of their record-keeping and reporting obligations under the OPC GL, set out in Chapter 6 of the OPC GL Guidance.

Obligations of involved persons

For the purposes of the OPC GL, an "Involved Person" is a person involved in the supply or delivery of oil and oil products; or in the provision of financial services, funds or brokering services relating to the supply or delivery of oil and oil products.

The OPC GL, in addition to the attestation requirements applicable to the different Tier providers, also imposes obligations on Involved Persons who are not Tier 1, Tier 2, Tier 3A or Tier 3B providers.

Under paragraph 25 of the OPC GL, Involved Persons (who are not Tier 1, Tier 2, Tier 3A or Tier 3B providers) must obtain a contractual commitment from their client or counterparty to provide, on request, an attestation for each contract involving the supply or delivery by ship of Russian oil from a place in Russia to a third country, or from one third country to another. Involved Persons are also expected to comply with the record-keeping requirements.

We recommend providers that are not Tier providers consider whether they may fall within the definition of "Involved Person" and ensure that they are carrying out their business in compliance with the OPC GL requirements.