September 29, 2021

OFAC settles with two Texas-based oil and gas service providers to resolve US sanctions violations

On September 27, 2021, the US Department of the Treasury’s Office of Foreign Assets Control announced that a $1.4 million settlement was reached with Cameron International Corporation, a Texas-based oil and gas goods/service supplier, and subsidiary of Schlumberger Limited, to resolve its potential civil liability for apparent violations of Directive 4 issued pursuant to Executive Order 13662 of March 24, 2014, “Blocking Property of Additional Persons Contributing to the Situation in Ukraine.”  OFAC reports that between July 2015 and November 2016, four US persons who were senior managers with Cameron approved five contracts that enabled a Romanian subsidiary to provide goods and services to a Russian energy firm Gazprom-Neft Shelf’s for an offshore oil-producing project.  At the time, Gazprom-Neft Shelf was a wholly owned subsidiary of OJSC Gazprom Neft, a company that was sanctioned by OFAC in September of 2014.  According to OFAC, the contract approvals specifically by US persons constituted service violations under Directive 4 of EO 13662.  At that time, Cameron managers were not aware of the apparent violations because their sanctions compliance procedures were not designed to catch violations involving US person-specific restrictions.  However, when Cameron was acquired by Schlumberger in April of 2016, Schlumberger discovered the Directive 4 violations, and Cameron notified OFAC of the apparent violation in June of 2017.  OFAC did not consider Cameron’s notification to be a voluntary self-disclosure but did determine that the conduct was non-egregious in nature – a decision that, along with other aggravating and mitigating factors, influenced the settlement amount. 

In a concurrent but separate action, a former Schlumberger subsidiary previously known as Schlumberger Rod Lift, Inc.(SRL) (now d/b/a Lufkin Rod Lift, Inc.), a Texas-based provider of rod lift and pump products for the oil and gas industry, entered into a $160,000 settlement with OFAC to settle potential civil liability for one apparent violation of the Sudanese Sanctions Regulations – regulations that have since been repealed in the US.  During the relevant time period, the Sudanese Sanctions Regulations prohibited US persons from facilitating the export or re-export of goods or services to Sudan.  According to OFAC, between December 2015 and April 2016 US persons who were employees of SRL arranged for the sale and shipment of oilfield equipment from Schlumberger’s Canadian subsidiary to a customer in Sudan – an act that, at the time, constituted a violation of US Sudan-related sanctions.  The settlement amount was affected by both aggravating and mitigating factors as well as OFAC’s determination that the SRL’s conduct was non-egregious.

Department of Treasury Recent Action | OFAC Enforcement Release I| OFAC Enforcement Release II