OFAC Sanctions “Oil-for-Food” Evasion Scheme and Vessels for Transporting and Lifting Venezuela Oil

June 18, 2020

On June 18, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned companies and individuals involved in a scheme to evade U.S. sanctions on Venezuela’s oil sector, pursuant to E.O. 13850. OFAC also designated two additional non-U.S. companies and vessels for lifting and transporting oil from Venezuela, under the same authority. The identifying information for the sanctioned individuals, companies, and vessels is located here.

The scheme to evade U.S. sanctions focused on an “oil-for-food” program, whereby Venezuelan-origin crude oil was brokered in exchange for corn and water truck deliveries. OFAC alleged that the amount of Venezuela crude oil lifted did not match the value of the corn and water trucks provided.

In addition, OFAC designated non-U.S. entities and vessels for lifting and transporting Venezuelan-origin crude oil. Concurrent with this action, OFAC issued General License 37, which authorizes certain transactions and activities that are ordinarily incident and necessary to the wind down of transactions involving these sanctioned entities through July 21, 2020.

In short, the U.S. is continuing to focus on the maritime industry, and in particular, non-U.S. companies and vessels that do business with the Government of Venezuela. As such, even non-U.S. companies face risk operating in certain sectors of the Venezuelan economy, including the lifting and transport of Venezuelan crude oil from Petroleos de Venezuela (PdVSA) or other companies owned by, or acting on behalf of, the Government of Venezuela.

We will continue to closely monitor developments in this space. If you have any questions or concerns about U.S. sanctions, please contact Bruce G. Paulsen (212-574-1533), Andrew S. Jacobson (212-574-1477), or Noah S. Czarny (212-574-1642) at Seward & Kissel’s Sanctions Practice Group.