OFAC Tightens Sanctions on Venezuela
February 6, 2019
PdVSA Added to OFAC’s SDN List
On January 28, 2019, pursuant to a pre-existing executive order, the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) added Petróleosde Venezuela, S.A. (“PdVSA”) to its Specially Designated Nationals and Blocked Persons List (“SDN List”).
As a result, U.S. persons are now generally prohibited from engaging in any transactions, directly or indirectly, with PdVSA or any entity owned 50 percent or more by PdVSA. In addition, U.S. persons must also block any property or interests in property of PdVSA, or of any entity owned 50 percent or more by PdVSA, that come into the U.S. person’s possession or control. Any U.S. person having a relationship with PdVSA should quickly evaluate that relationship and act with caution.
New General Licenses
Concomitant with adding PdVSA to its SDN List, OFAC issued the following general licenses:
- General License 7: Permitting certain transactions involving PDV Holding, Inc. (“PDVH”) and CITGO Holding, Inc. (and any of their subsidiaries) through April 26, 2019, and permitting PDVH and CITGO Holding, Inc. to engage in transactions necessary for the purchase and importation of petroleum and petroleum products from PdVSA through April 27, 2019.• General License 8: Permitting five enumerated companies (Chevron Corporation, Halliburton, Schumberger Limited, Baker Hughes, and Weatherford International) to engage in certain transactions involving PdVSA through July 26, 2019.
• General License 9: Permitting: (a) transactions necessary to dealings in any debt of PdVSA (or any entity in which it owns a 50 percent or greater interest) that was issued prior to August 25, 2017, provided that divestment or transfer of any holdings in such debt must be to a non-U.S. person, and (b) transactions necessary to dealings in bonds issued prior to August 25, 2017 by PDVH, CITGO Holdings, Inc., Nynas AB, (or any of their subsidiaries).
• General License 10: Permitting U.S. persons in Venezuela to purchase petroleum products from PdVSA for personal or commercial use (but not for resale, transfer, or exportation purposes).
• General License 11: Permitting U.S. persons who are employees or contractors of non-U.S. entities located in a country other than the U.S. or Venezuela to engage in transactions necessary to maintain or wind down pre-existing operations, contracts, or agreements involving PdVSA until March 28, 2019.
• General License 12: Permitting, subject to certain enumerated conditions and limitations: (a) transactions necessary to the purchase and importation into the U.S. of petroleum and petroleum products from PdVSA (or any entity in which it owns a 50 percent or greater interest) through April 27, 2019, and (b) transactions necessary to wind down of pre-existing operations, contracts, or agreements involving PdVSA (or any entity in which it owns a 50 percent or greater interest), including the importation into the U.S. of goods, services, or technology through February 26, 2019.
• General License 13: Permitting, subject to certain enumerates restrictions and conditions, transactions in which Nynas AM (or any of its subsidiaries) is the only PdVSA-related entity through July 26, 2019.
• General License 14: Permitting all transactions that are for the official business of the U.S. government by employees, grantees, or contractors.
General License 3A
OFAC also replaced General License 3, issued in August 2017, with General License 3A.
General License 3 authorized U.S. persons to engage in transactions in the following Venezuela-related bonds which but for General License 3 would have been prohibited under a pre-existing executive order (Executive Order 13808): (1) those enumerated on an Annex released with General License 3, and (2) those issued prior to August 25, 2017 by U.S. entities owned or controlled by the Government of Venezuela.
Newly released General License 3A updates the list of bonds on the Annex. Although General License 3A also carves out Nynas AB, PDVH, and CITGO Holding, Inc (and their subsidiaries) from the authorization permitting dealings in bonds issued pre-August 25, 2017 by U.S. entities owned or controlled by the Government of Venezuela, as noted above, General License 9 separately permits transactions necessary to dealings in bonds issued prior to August 25, 2017 by Nynas AB, PDVH, and CITGO Holdings, Inc. (or any of their subsidiaries).
OFAC has indicated that it plans to issue greater guidance in the future on Venezuela sanctions, including additional FAQs. We will continue to follow developments in this space closely.
If you have any questions or concerns about U.S. sanctions against Venezuela, please contact Bruce G. Paulsen (212-574-1533), Andrew S. Jacobson (212-574-1477), Noah S. Czarny (212-574-1642), or Paul B. Koepp (212-574-1613) at Seward & Kissel’s Sanctions Practice Group.
For additional insights from Seward & Kissel’s Sanctions Practice Group, please see the attached article recently published in the New York Law Journal regarding the enforcement of economic sanctions by the New York State Department of Financial Services (“DFS”).